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Calculate Zakat on Art, NFTs, and Collectibles | IslamicFinanceGuru

newsblur - Thu, 2021-04-15 11:31
IslamicFinance shared this story from IslamicFinanceGuru. 1. Is Zakat due on collectibles?

The collectibles market is ancient and can range from works of art and coins to modern items such as sports cards and now non-fungible tokens (NFTs).

The general rule here is: Zakat is only due on a collectible if it is bought with the intention to resell in the short-term.

2. Is Zakat due on this asset? Collectibles

If you purchase any sort of collectible, whether it be a physical work of art or a digital work of art in the form of an NFT, you only pay Zakat if your intention is to resell in the short-term.

If you buy the collectible to simply hold it, or for aesthetic reasons and as a pastime, then Zakat will not be due on it.

If you hold an asset that is non-sharia-compliant – e.g. an inappropriate painting – then zakat would not be due on that in any case as it would be deemed a haram asset.

NFTs

Additionally, with respect to NFTs specifically, if the asset you have bought is something that is fundamentally not that “useful” (e.g. arguably, owning a Tweet to which you have no real access to our usage rights to) then that may not be seen as sharia-compliant to begin with anyway. For more on NFTs, see this article here.

Coin collection

An exception to the above is if you collect coins and there are coins in your collection that are made of gold or silver.

In this scenario, Zakat would be due as per the Zakat rule on gold and silver.

3. Practical example

Ahmed is an avid collector of works of art, both digital and physical.

He has a personal art collection worth £10,000 and has also purchased £10,000 worth of NFTs.

Ahmed also has a coin collection. He weighed up the gold and silver content in the coins and it adds up to £1,000.

His personal art collection is purely for aesthetic purposes and he has no intention to resell. No Zakat is due there.

He bought £5,000 worth of NFTs simply because he wanted to support an up-and-coming digital artist and has no intention of reselling. No Zakat there again.

However, he bought £5,000 worth of NFTs as an investment with the intention to make money. He intends to sell at the next opportune time and monitors the market regularly for this reason.

Zakat is due on this £5,000 worth of NFTs since it is intended for resale. That’s £125 of Zakat.

His coin collection has £1,000 worth of gold and silver content. He owes £25 of Zakat on that.

The total Zakat Ahmed owes that year for his collectibles is £150.

4. Calculate your Zakat here

Here is a simple and easy way to calculate your Zakat using our comprehensive Zakat calculator.

Here is our detailed Zakat FAQ series.

The post Calculate Zakat on Art, NFTs, and Collectibles | IslamicFinanceGuru appeared first on IslamicFinanceGuru.

NMC sues Dubai bank in $6 billion UAE debt row: Sources - Economic Times

newsblur - Thu, 2021-04-15 10:54
IslamicFinance shared this story from "dubai islamic bank" - Google News. NMC sues Dubai bank in $6 billion UAE debt row: Sources  Economic Times

Malaysia leads global Islamic economy for eighth year - The Sun Daily

newsblur - Thu, 2021-04-15 10:49
IslamicFinance shared this story from "islamic finance" - Google News. Malaysia leads global Islamic economy for eighth year  The Sun Daily

Watch Now: Scholar Webinar

newsblur - Wed, 2021-04-14 13:30
IslamicFinance shared this story from Blog | Guidance Residential | Islamic Home Financing.

Guidance Residential and 3 of the most prominent global scholars on Islamic Home Finance discuss its positive impact on society. This Scholar webinar features Shaykh Mufti Muhammad Taqi Usmani, Chairman, Guidance Shariah Board, Dr. Imran Usmani, Shariah Board Member, Pakistan, and Shaykh Yusuf Talal Delorenzo, Guidance Shariah Board Member, USA.

The post Watch Now: Scholar Webinar appeared first on Blog | Guidance Residential | Islamic Home Financing.

Investors must probe ESG credentials to deter 'greenwashing' - The Malaysian Reserve

newsblur - Wed, 2021-04-14 09:57
IslamicFinance shared this story from "islamic asset management" - Google News. Investors must probe ESG credentials to deter 'greenwashing'  The Malaysian Reserve

Zakat on Assets – A Quick Review

newsblur - Tue, 2021-04-13 09:28
IslamicFinance shared this story from JoeBradford.net.

Let’s talk Zakat on Assets:

– 1st, assets you do not pay Zakat on.

– 2nd, assets you do pay Zakat on.

– 3rd, deductions and expenses that lower your Zakat liability.

 

A thread :

1st: There some types of assets that you will not pay Zakat on.

 

A- Personal assets: things like personal items, you home, car, etc. All of these items are not liable for Zakat.

 

B- Bad debts: Amounts that you have loaned to others & cannot be repaid due to default or denial.

 

C- Lost, Frozen, or Inaccessible wealth: this includes things like frozen bank accounts, money that you have lost, or amounts that you can’t access due to contract or penalty.

 

 

D- Illiquid wealth: assets that you purchase for their potential increase in value but cannot be reliably valuated until the time of sale. things like art that you buy for investment or shares in a startup or real estate in an illiquid Market.

 

So here a summary of # 1:

A – You never pay zakat on these.

B – You never pay on these until actually recieved then held for a year.

C – You will pay on these once when recuperated, then every year forward.

D – You will pay on these once at the time of sale, not every year.

 

2nd- Assets you *do* pay Zakat on:

– livestock and crops

– gold, silver, and equivalents

– liquid assets

– inventory and receivables

 

Let’s talk about each of these then a few scenarios for each.

 

2.a Livestock and crops: These have special rules for farmers and ranchers. Grazing cattle, sheep, goats, or camels are liable on a per head basis. Crops are paid at time of harvest. I’ve yet to meet someone who needs details of this category, but happy to provide if you do.

 

2.b Gold & silver: Any held as a store of value is considered liable for zakat; this includes jewelry. While there are some scholars who exempted jewelry worn – used regularly, like a personal asset, the stronger of the two opinions is that jewelry is still liable.

 

2.b Gold and silver equivalents: this includes all Fiat currencies, representative currencies, cryptocurrencies, and tokens. The entire value must be included in your calculations, unless inaccessible (like frozen in an account or locked in a wallet).

 

2.c Liquid Assets. this generally includes cash which we’ve already covered, money market instruments, and marketable securities.

so if you own stocks and bonds you will pay Zakat on them. If you have mutual funds, etfs, RSUs, MLPs, then you will pay Zakat on them.

 

2.c What about 401ks, IRAs, Taxable brokerage accounts & similar?

Remember these are simply accounts that hold your securities they are not securities in & of themselves.

there are two factors that will determine whether the securities in these accounts will be liable for Zakat.

 

2.c Factors affecting Zakat liability:

No. 1: if you are unable to withdraw these funds without penalty then you will not pay zakat on them.

No. 2: if you can access them penalty free & you hold them as a long-term, passive Investment, then your liability is lowered.

 

Examples of No. 1:

– Your 401k or Traditional IRA is inaccessible until retirement so you don’t pay on it until that time.

– Your Roth contributions are accessible at all times, so you pay on them but not gains.

– Your HSA is accessible, so you pay on its entire value.

 

Example of No. 2:

– If your Taxable brokerage account (your robinhood, WeBull, Fidelity, or similar ) holds stocks for swing trades (not intended for the long term) you pay on the entire Market Value.

– If you’re holding for the long term, you pay on the Current Assets per share.

 

2.d Inventory and Receivables

– receivables are considered same as cash as long as they are not delinquent and therefore must be included at value in your calculations.

– freestanding inventory which is currently on the market and is not under contract must be included.

 

3 Deductions and Expenses that lower your Zakat liability

– in general all immediate expenses may be deducted from your total liable assets.

– Note: Only deduct the *immediate* expense, liability, or debt. So deduct 1 month of your mortgage payment, not the entire mortgage debt.

– if your expense is paid weekly, deduct one week. if monthly deduct 1 month. if by yearly deduct 6 months. and so on.

– be sure to review this thread for types of assets and accounts that defer or lower your zakat liability.

– If you have incurred losses on your Investments then you are only going to include the current market value for short-term trades and only the current assets on long-term trades.

– if your losses engulf all of your gains, it’s a wash & you wouldnt owe Zakat on those amounts.

That’s all I have for now. if you want more detailed information on the topic you can always purchase my book Simple Zakat Guide (amazon: print & kindle)Simple Zakat Guide (amazon: print & kindle), the accompanying video courses, or get the 9 course bundle I have running now.

 

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