I have some questions about Zakat calculations for the following items, wondering if I can get an answer from you:
- Registered education saving plan RESP
- Registered retirement saving plan RRSP
- Company retirement pension plan RPP
- Rental Investment property
Or if you can direct to any reliable source to get information on this.
Bismillahi Ta’ala
Walaikum Assalam Warahmatullah
1. Zakat on RESP: https://qna.ilmhub.com/question/how-do-we-calculate-zakat-on-resp/
2. Past questions on it :
Q. Do I have to calculate Zakat on my CPP? If so, do I calculate it every year?
A. CPP is a mandatory Pension Plan from the Govt. In a mandatory Pension Plan, Zakat is not wajib every year, rather only when one takes possession of the funds. Once the funds come into possession of an individual, then at that time these funds will be regarded as zakatable assets.
Moreover, one will not calculate Zakat on previous years on such a mandatory Pension Plan.
Q. Is the Zakat calculation for RRSP same as CPP? What about my employer’s contributions?
Unlike CPP, RRSP (Registered Retirement Saving Plan) is not a mandatory plan. A person enters into it voluntarily. Hence, the ruling will slightly differ in this case. But before its zakat calculation one must remember to opt for self-directed RRSP so that the investments are Shariah Compliant.
The proceeds which one contributes are one’s own assets, albeit one does not have their possession at this time. Hence Zakat has to be paid on it, but since he does not have access to it, its compulsion to pay will only come when one regains possession of it after age of 65.
At that time, one would have to give Zakat on all of one’s contribution and for all the years it has sat in the plan as well. If the person wishes he may pay zakat on his year-to-date contribution every year, and if he wishes he may pay it once its compulsion actually kicks in when he gets access to it at age 65.
The amount which an employer matches does not belong to this individual throughout the life of the plan, and comes into his possession as a gift at age 65. Hence this employer’s contribution will only become Zakatable at the time of possession. One will not have to pay Zakat on employers contribution for the past years.
3. RPP will follow the same procedures as above depending on how it has been set up.
4. In a rental property, zakat is liable on the rental income. The rental income will added into the “zakatable assets” pool, and then one would deduct the zakat-deductible liabilities from it to get the net-zakatable assets.
Wallahu A’lam
And Allah Ta’āla Knows Best
Mufti Faisal al-Mahmudi