Yasir Qadhi – The Fiqh of Zakat – Part 2

			hamdulillah Isla De Niro
		

			Al hamdu Al Hamdulillah Al Hamdulillah Camden Kathie Lee Banila Bullock
		

			delta and Cooney Noir, una Masada tuber slim Elon Musk global Kareem
		

			spell al hamdu Lillah wa Salatu was Salam ala rasulillah Ali, he will be here.
		

			Today will continue part two of our lecture on Zika would be a little bit technical, but I apologize
for that. But it needs to be done in terms of how to get Zika. I don't want to begin by stating that
modern rules of Zika are obviously very, we're not talking about classical fit. We're talking about
stocks, we're talking about mutual funds. We're talking about 401k. Obviously, our modern scholars
have tried their best to make HD hard and you will find a spectrum of opinion. Therefore my advice
to you all. Don't play games with the Shetty. Allah knows your intention. Allah knows you're trying
your best and Allah will judge you based upon your intention. Try your best. And Allah knows your
		

			sincerity as the chef that you trust, and then follow that advice. So very briefly,
		

			how do we give Zakat on our liquid assets? Technically, Zakat is due on the amount that a person has
owned for a whole lunar year as we said, so are scholars in trying to make Islam easy for us, they
gave us a simple rule. They said the fact that most of us are salaried employees, and that our bank
accounts are going to vary every single month, they advised us the following choose one date of the
year. And we're doing this lecture in Ramadan, because most of us choose the date in Ramadan, 15th,
Ramadan, 20th Ramadan, first Ramadan, choose one date of the year that is your cat to date. And
every single date that same date, all that you do is you look at your liquid assets on that date,
		

			and you pay 2.5% of your liquid assets on that date, you look at what you have in your bank account,
you look at the cash that you have, you look at everything that is basically liquid assets on hand
on that day, and you simply assume it to be your standard for the entire year. Now Alternatively, if
you want to do the advanced, then technically you have to see every single month from the last year,
how much you've had, you make a graph and a chart and it gets very, very complicated very fast.
That's why our scholars said the easy way and inshallah it is permissible, because most of us on
salaried checks, we're living on our salary checks by and large, your bank account varies slightly
		

			up and down, we have a steady balance, we know what that is. And generally speaking, we have the
similar amount on that data varzuga. So we simply assume on that date, and we calculate simple 2.5%.
Now that's liquid assets, that means our bank accounts, that means any cash that we have on hand,
that means as we said yesterday, the jewelry that is golden silver, how about stocks, stocks, once
again, there are three or four opinions. And I'm not going to complicate things, I'll try to give
you the simplest possible but it can't be that easy. We have to divide stocks into two categories.
The first are those that are active day traders. They go in, they're aggressive, they're monitoring
		

			the price, they're seeing when it goes up or down, they're going to sell as soon as the price is
right, they want to sell it. And the way you know active traders, you know who they are, because
they're checking the prices almost daily, maybe 10 times a day, they're actually day traders, they
sell in the morning and day eight times maybe. But if you're actively monitoring the price, and
you're wanting to sell as soon as the price is amenable to what you want, this is your active stock
trading, you will deal with it like you deal with business merchandise, which means 2.5% of the
paper value of the stock on the day of your Zika. So if you're 20th Ramadan is the day of your Zika
		

			and you're an active stock trader, for example, you're buying and selling Uber or you're buying and
selling even a Bitcoin would be the same thing. So if you're buying and selling these types of
stocks actively or even Bitcoin as a type of currency, so if you're actively buying and selling on
the 20th of Ramadan, you simply log on you look at your value, and that 2.5% will be yours that got
Simple as that done deal. The problem comes, what if it's not an active trade? What if you are a
long term investor? What if you're just putting it into a mutual fund, and you really are not
monitoring the price and it's really meant for a rainy day, it's meant for something long term. And
		

			this is where really you get a spectrum of opinion, and it is a gray area. And I'm going to try to
make it simple Actually, I did a discussion with one of my teachers and mentors today so that I can
give you an opinion that is coming from somebody more knowledgeable than me. And after a long
discussion and he's an expert in Islamic finance. The problem with mutual funds is that
		

			There's a catch would only be due on those assets that are tangible. And so it gets a little bit
complicated to make it very short what he suggested, if you have a mutual funds, that is long term,
which means you are not actively Buying and selling. In that case, your Zakat will be between point
five to 1% of the paper value, how he got to this percentage is a little bit more complicated. And I
don't want to confuse you all. But the point is that, on average, 30% of the mutual fund is
acceptable, not set, not 100%. Why? Because if it's a long term investment, Zakat is only due on the
tangible assets, not under services. And on average, a mutual fund might have around 30 to 40% of
		

			tangible assets. So basically between point five to 1%, if your mutual funds is more in the services
sector, it'll go down, if it's more in the actual, if you're in the oil industry, you're actually in
the mutual funds of buying and selling oil mutual funds of gold, in that case is tangible assets is
going to go up a little bit more to the 1%. But basically a rule of thumb, long term investments
that are mutual funds that you're not actively involved in buying and selling, then there's a cat is
roughly 30% of that value. So that translates as between point five to 1% of the paper value that
you're gonna see on the day of yours, that guy the 20th of Ramadan, you log on and you give between
		

			point five and 1.5. If it is more services, and one if it is more 1% if it's more actual tangible
assets. That's the the range that my teacher and mentor gave. Now we move to the other problematic
issue. And I'm going to confuse you a little bit more as well. And that is the 401k or the
retirement one. And all some of you already know what is going to come right now. I've been on this
podium Mashallah sabbatical and nine years in a row. Every year I give a lecture on Zakat and
Ramadan, and I have vacillated my opinion back and forth twice in the last nine years. Now I'm going
to vacillate one more time three times changing, and it's not my fault. This is a luz clutter on us
		

			that we keep on changing our minds. In this regard and in Charlotte's assigned also of active
research. 401 K is definitely a very, very discussed area amongst your odema. And for when I first
came here, the first one I gave all of you, you should give Zakat on the 401k amount around five,
six years ago, I changed my position to that of shift for Bobby and others who said you don't give
the gap. And so you give zeros, aka, then three years ago, I joined the fifth Council in North
America. For the last two years, we have been debating 401 K's in our meetings we are constantly
this has been the number one issue for the last two years of the fifth Council. What is this account
		

			on 401 K's now. And in fact, we just finished our meeting last month. So the fifth Council in North
America, which is the senior most oldest body of Islamic scholars in North America, and that
hamdulillah I'm a member of that, and I will respectfully follow their positions. And I'm a member I
have to follow their position as well. And actually now they have convinced me of this as well, that
in fact, the position that is now from the fifth Council is the following. And that is that the
first word is that you will give Zakat on the amount that is cacheable after penalties and taxes.
Okay, if you were to access that 401k, whatever the penalty is, get rid of it, whatever you would
		

			get tax, get rid of it, then that final amount 2.5% of that theoretical amount. Let me give you a
simple example. Suppose your 401k had 200,000 in it, and you have a 20% penalty if you were to cash
it out. So if you have a 20% penalty that makes it to 160,000. Suppose your tax bracket is roughly
25%. So 160 1000 then goes to 120 1000. Okay, now you calculate 2.5% of that 120 1000. And that
works out to $3,000 $3,000. That's my whole that's reasonable. If your 401k is 300,000, then $3,000
is or sorry, 200,000, then $3,000 is reasonable amount for you to give Now, one of the discussions
in our field counsel was what if somebody is at the end of retirement, he has 300,000 200,000 views
		

			mean but he doesn't have 3000 of his check to give what does he do then? So the first word then is
the following. It's very simple. 3000 is a debt owed to Allah and Allah will forgive that debt until
you can pay it. So if you can pay 1000 of that 3000 you pay it now and you write down on a piece of
paper 2000 for 2019 next year, another 2000 next year, another one you finally cash out your 250,000
if you actually add it up, your debt owed was going to be maybe 789 1000 in seconds. And so you will
pay it when you cash out. But it is a debt owed to Allah Subhana Allah to Allah and Allah will not
ask you to forcibly cash out your 401k if you cannot afford to pay so very simple. You pay what you
		

			can have that
		

			2.5% that is cashable clear enough. And whatever you cannot you just make a note of it that for this
year, I wasn't able to pay that much. And it is an easy debt, it's a non binding debt until you cash
out the 401k. When you cash out the 401k, then you add up those debts. And generally speaking, it's
not payable. For those of us that are struggling at the end of our retirement, not at the beginning,
at the beginning, the 401k will be 15,000 25,000 35,000 gonna be reasonable. But towards the end of
our you know, closer to retirement, maybe it is a very large amount, and we cannot afford to pay, in
which case aphylla, who I myself a lot locally for long enough in a local saraha you pay what you
		

			can, and you just make a note that I wasn't able to pay this much. And when you actually cash out
the 401k you will then pay that as a cat as a one off and this is I think a reasonable fatawa and
Allah Subhana Allah knows best. The final issue that we're gonna discuss is the cap on business
commodities What if you own a business, those who buy and sell business commodities, those who buy
and sell merchandise, for example, you own a gas store, convenience store, you own a furniture
store, you must give Zakat on the value of the commodities that are actually purchased and sold. And
you will calculate 2.5% on the day of your tickets. So 20th of Ramadan, you will do an inventory
		

			your stock and whatever is the retail value whatever is the general market value of that merchandise
you will pay 2.5% of Zakat on that and Allah knows you're trying your best you're not having a trick
that the day before you've got this do you get rid of your merchandise Allah knows this that you're
playing a fair game and whatever is the 2.5% on the day of your ticket that is going to be
calculated. Zakat is due only on merchandise that is purchased and sold. If you own something that
you rent for example, rental property, for example, you own a house and it is meant for rent. You do
not give Zakat on the cost of the house you give Zakat on the rental income that you have had for a
		

			year. So basically, if you have a house that you're renting out, you're going to get money the money
is going to go in your bank account, therefore the cash will be on the money with the rest of your
money that you will calculate on the 20th of Ramadan. Zakat is not due on the cost of the item that
is rented. Zakat is only do 2.5% on merchandise that is purchased and sold. And I said the 5% of the
points that got on loans, the cut on loans, when it comes to loans. In a nutshell, the shady I
distinguishes between what are called hard loans and soft loans. And a to put it in a very easy
manner. If the money is as if it is non existent, you can ignore it. Suppose you gave somebody
		

			$10,000 and the person is in struggling circumstances you don't know when this person is going to
pay back then there is no as that cuts, because you don't have anything of that. But suppose the
person has now the capacity to pay you back. But you're just not asking because you don't need it. I
mean, okay, whenever I went to Alaska, and you know that this brother or you assume that this
brother can pay you back 10,000 in this case, there is a cot, you will have to add it that hey, this
person owes me 10,000 and I all I have to do is make a phone call, but I don't need it. That's why I
just don't want to cause any issues. Whenever I needed I'll call him in this case the 10,000 will be
		

			added to the amount of Zika. However, if it's a soft loan, and also a long term loan, then there is
no
		

			reduct a deduction of Zakat, because all of us have long term loans that are payable in
installments. If we were to do that the average Muslim has a mortgage and so all of us are negative
assets. Anyway, we do not take into account large long term loans when it comes to Zika. We ignore
them we have a house mortgage of $300,000 that does not come under the cap. There is no calculation
we don't subtract 300,000 from our net assets, or else every one of us would be negative. It's only
short term loans that are solid that we know we have access to. Those are the ones that we will add
to our ziggu otherwise we do not add that to ours that gap obviously is the gap cannot be given on
		

			how our money the purpose of Zakat is to purify. So if we seek Allah's refuge, if one of us has
income, that is how long the concept of paying Zakat on that is ludicrous, it is nonsensical, it
doesn't make any sense. The purpose of Zakat is to purify. And so if a person owns a liquor store,
if a person has something completely wrong, and they're getting this money completely from how long
this is the month of Ramadan, they need to repent from that money in totality and they should get
rid of that money and give it to the poor Allah will reward them for their pure pure intention and
not for the deed and money itself because the money is filthy well level please give $1 per year but
		

			Allah only accepts that which is pure. And to conclude, therefore try your best foot to Allah
homicidal thoughts on this the month of Ramadan, the month of charity try your best to make a
reasonable calculation of zeca diversity
		

			sci fi your investments in zakaat as well give to various funds as well. And if you allow me a quick
plug I myself have a project that I'm doing which is to open up a school for the Kashmiri refugees
which is illegible because 10% of them are orphans so that Zakat goes to the orphans I have visited
the province and I'm directly involved if you're interested you can come and speak to me or log on
to the videos as well but it gives a card to every single charity that you feel comfortable and the
best Zakah that you give will be to extended family and relatives that needed and the best Zakah is
not told to them it is given to them as a gift and Allah subhana wa tada knows it is aka May Allah
		

			accept our sadaqa in this month and inshallah will continue regular hot that is tomorrow set