Zakat Guide

Your Practical and Spiritual Guide to Zakat

Zakat is more than a duty — it’s a pillar of Islam that purifies wealth, uplifts the poor, and strengthens the Ummah. This guide helps you understand, calculate, and give your Zakat with confidence and sincerity.

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1. What Is Zakat?

Zakat is a mandatory form of charity, prescribed by Allah ﷻ, that purifies wealth and redistributes it among those in need.

Meaning: The word “Zakat” means purification and growth.
Purpose: To cleanse our wealth and hearts from greed, while ensuring justice and balance in society.
Obligation: It’s the third pillar of Islam and becomes due once a Muslim’s wealth reaches the nisab and a lunar year has passed.

“Take from their wealth a charity by which you purify them and cause them increase…”
(Surah at-Tawbah 9:103)

2. The Importance of Zakat in Islam

Zakat is not just financial — it’s spiritual and social:

It purifies the giver’s wealth and heart.
It uplifts those in hardship.
It builds unity, compassion, and economic balance within the Ummah.

In Aotearoa New Zealand, your Zakat has the power to strengthen our local Muslim community — helping converts, widows, single mothers, and families in crisis.

3. Who Must Pay Zakat

You must pay Zakat if you meet these conditions:

You are Muslim, adult, sane, and free.
You own wealth equal to or above the nisab (minimum threshold).
A full lunar year has passed on that wealth.

If these apply, Zakat becomes obligatory on your assets that meet the conditions (see below).

4. What Wealth Is Zakat Payable On

Zakat is due on wealth that grows or has the potential to grow, including:

Cash and savings (bank accounts, wallets, etc.)
Gold and silver (jewellery or bullion)
Investments (shares, crypto, business inventory)
Rental income (after expenses)
Agricultural produce and livestock (if applicable)

5. The Nisab (Minimum Threshold)

Nisab is the minimum amount of wealth a Muslim must own before Zakat becomes obligatory.

It is calculated based on the value of 87.48 grams of gold or 612.36 grams of silver.
NZZF publishes the current Nisab values on our website (updated monthly).

If your wealth equals or exceeds this value, Zakat is due at 2.5% after one lunar year.

6. Zakat Calculation (Step-by-Step)

To calculate:

Add all Zakatable assets: cash, savings, gold, silver, investments, business inventory, etc.
Subtract liabilities: outstanding bills, rent, or debts due within the year.
Determine if above Nisab.
Calculate 2.5% of the remaining total.

You can use NZZF’s Zakat Calculator to make this process easier.

7. Who Can Receive Zakat (The Eight Asnaf)

Allah ﷻ has specified eight categories eligible to receive Zakat (asnaf) in the Qur’an (9:60):

The poor (fuqara’)
The needy (masakin)
Those employed to collect Zakat
Those whose hearts are to be reconciled
Those in bondage (to free captives/slaves)
Those in debt (gharimeen)
In the path of Allah (fi sabeelillah)
The traveller in need (ibn as-sabeel)

At NZZF, we prioritise these categories within New Zealand — ensuring your Zakat reaches eligible Muslims locally.

8. The Difference Between Zakat and Sadaqah

Category	Zakat	Sadaqah
Obligation	Mandatory	Voluntary
Eligibility	Only for the eight asnaf	Anyone, anytime
Rate	Fixed at 2.5%	No fixed amount
Timing	Once lunar year passes	Anytime
Purpose	Purifies wealth, fulfils a pillar	Increases blessings, earns reward

9. Zakat al-Fitr (Fitrana)

Zakat al-Fitr is a separate obligation paid before Eid al-Fitr.
It purifies one’s fast and ensures every Muslim can enjoy Eid with dignity.

Amount: Equivalent to 2.5 kg of staple food (e.g. rice or wheat) or its value in cash.
Who Pays: Every Muslim able to do so, on behalf of themselves and their dependents.

10. Giving Zakat Locally

Many scholars, past and present, have stated that Zakat should be distributed within one’s own community or country when there are eligible recipients present. This view is based on the practice of the Prophet ﷺ and his Companions, who collected and distributed Zakat within the same region.

Classical jurists such as Imam al-Nawawi (Shafi‘i), Ibn Qudāmah (Hanbali), and Imam Malik all held that Zakat should not be transferred elsewhere if there are local needs, unless there is a stronger necessity or benefit (maslahah). Contemporary scholars and Zakat institutions — including bodies like the European Council for Fatwa and Research, Dar al-Ifta al-Misriyyah, and Majma‘ al-Fiqh al-Islami — reaffirm this principle in the context of modern Muslim minorities.

In summary:
When eligible recipients exist locally, it is preferable and more beneficial to distribute Zakat in that community first.
If urgent crises arise elsewhere, or if a trusted organisation can deliver greater benefit abroad, transferring Zakat is permissible.

Through this approach, the New Zealand Zakat Foundation ensures that your Zakat fulfils both aspects — local priority and global compassion — by addressing verified needs within New Zealand first, while partnering with trusted international organisations like MAA International for overseas emergencies when necessary.

11. Zakat on Businesses and Investments

If you own a business:

Zakat is due on cash, stock, receivables, and short-term assets.
Fixed assets (machinery, buildings) are exempt.

For investments (shares, crypto, etc.), Zakat applies on their market value at your Zakat due date.

NZZF’s calculator includes these fields to make it simple.

12. Common Questions

Can I pay Zakat in instalments?
Yes, if you know the total amount due.
Can I give Zakat to family?
Yes — but not to those you are already financially responsible for (like spouse or children).
Can I pay Zakat early?
Yes — especially if urgent needs arise.
Is Sadaqah eligible for tax deduction?
Zakat and Sadaqah to local registered causes may qualify under NZ charity rules — check with NZZF or your accountant.

13. How to Pay Zakat with NZZF

Calculate your Zakat using our online tool.
Choose where to direct it — local hardship, convert care, education, or general fund.
Pay online securely or set up recurring monthly giving.
Receive confirmation and updates on how your contribution helps.

Your Zakat, given with intention and care, transforms lives and strengthens the Ummah in New Zealand.

14. Glossary of Key Terms

Zakat (زكاة)
A compulsory act of worship and one of the five pillars of Islam. It is a form of almsgiving that purifies one’s wealth by giving a fixed portion (2.5%) to eligible recipients each lunar year.

Sadaqah (صدقة)
A voluntary act of charity given at any time and in any amount, for the sake of Allah. Unlike Zakat, Sadaqah has no fixed rate or eligibility conditions and can be given to anyone in need.

Sadaqah Jariyah (صدقة جارية)
An ongoing charity that continues to benefit others long after it’s given — such as building a well, funding education, or supporting community infrastructure. The giver receives ongoing reward (thawab) even after death.

Nisab (نصاب)
The minimum threshold of wealth a Muslim must own before Zakat becomes obligatory. It is equivalent to the value of 87.48 grams of gold or 612.36 grams of silver, and changes based on market rates.

Hawl (حول)
A lunar year (approximately 354 days). Zakat becomes due when a Muslim’s wealth remains above the Nisab level for one full lunar year.

Asnaf (أصناف)
The eight categories of people eligible to receive Zakat, as outlined in the Qur’an (Surah al-Tawbah, 9:60). These include the poor, the needy, those in debt, and others entitled to assistance.

Gharimeen (الغارمين)
Those overwhelmed by debt and unable to repay it without falling into hardship. This is one of the eight Asnaf categories eligible to receive Zakat.

Fi Sabeelillah (في سبيل الله)
Literally “in the path of Allah.” Traditionally understood as those striving in Allah’s cause, and broadly applied by some scholars today to include initiatives that serve the faith and welfare of the Muslim community.

Zakat al-Fitr (زكاة الفطر)
A separate, obligatory charity given before the Eid al-Fitr prayer at the end of Ramadan. It purifies the fast and ensures that all Muslims can share in the joy of Eid.

Zakatable Assets
Types of wealth that are subject to Zakat, including cash, gold, silver, business inventory, investments, and income from rental or trade.

Eligible Recipients (Mustahiqeen / مستحقين)
Those who meet the Islamic criteria to receive Zakat — such as the poor, the needy, and the indebted — as defined in the eight Asnaf categories.

Intention (Niyyah / نية)
A sincere intention in the heart to fulfil one’s duty of Zakat for the sake of Allah. It must be made at the time of giving.