22 April 2021   9. Ramadhan 1442

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Zakaat on unit trust property investment

Q: If you invest in unit trusts property investment do you pay Zakaat on total investment or profits?

A: The Unit trust itself is Zakaatable. 

Zakaat on Shares/Unit Trusts

Zakaat is technically not due on the entire share/unit. Rather Zakaat is only due upon the Zakaatable assets of the company (i.e. the market value of the merchandise as well as cash and debtors etc. of the company). As far as the non-Zakaatable assets of the company are concerned e.g. fixtures, fittings, transport vehicles, etc. which are not part of the merchandise of the company, the value of all these things will be evaluated in the share and will not be taken in account when discharging the Zakaat. If it is difficult to differentiate between the Zakaatable and non-Zakaatable assets of the company, then as a precautionary measure one should discharge the Zakaat on the full current market value of the entire share as this will generally safely reflect the net-asset value (plus demand for them).

Therefore, if a company has issued 1 000 shares or a unit trust has issued 1 000 units and you have purchased 100 shares or units then you own 1 tenth of the company or the unit trust. If the Zakaatable assets of the company or fund equals one million Rand then you have to give 2.5% of one tenth of 1 million Rand which will be R2 500.

Zakaat on the profits depends on what was done with the profits.

If it is not reinvested but taken out it will be considered as cash at hand. If this amount is still in one’s possession at the end of the Zakaatable year then it will be Zakaatable as cash. If it was already spent during the course of the year then there is no Zakaat.

If the profits were reinvested by purchasing units etc. then Zakaat will be paid in the same way Zakaat is paid on unit Trusts.

And Allah Ta'ala Knows Best

Was Salaam
Shafique Jakhura (Mufti) MD Mangera (Mufti)

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  • Mahr Fatimi: R19 458.62
  • Minimum Mahr: R389.17
  • Zakaah Nisaab: R7783.45
  • Fidya: R20.00

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