Personal Zakaat Calculation While Being A Partner In A Business

Question

A person has personal wealth over the value of Nisaab, and is eligible for zakaat in his personal  capacity.

However he is also a  partner (shareholder) in a business. Currently he gains no income or any other benefit from the business as it is still very new. At the moment the business has more liabilities than income/stock due to  the loans taken to start the business. For zakaat  purposes does the person have to take into account the business as well, as it would mean that the person would not be paying any zakaat, or should he still pay zakaat from his personal capacity?

Answer

Zakaat is obligatory upon the partners of a business in their individual capacity and not the business itself. Therefore, every partner is required to calculate his personal assets (whether in the form of cash, business merchandise, jewellery, investments, or other) and discharge his Zakaat. There is no Zakaat on fixture and fittings of a business.

As per our telephonic conversation, you explained that you and your partner acquired a long term loan for the business, which will be gradually offset over a period of time. This is what is being referred to as the liabilities in the query submitted to our Ifta department. In the case of a long term loan, the total payments made towards the loan for the year should be subtracted and Zakaat will be payable on the remainder of the business. 

For example: Zaid and Bakr are business partners on a 50/50 basis, who have acquired a business loan of 1 million Rand. They pay a monthly installment of R5000.00 towards the loan from the business which totals to R60 000.00 per annum. Their total assets in the form of goods of merchandise, cash, etc. is R500 000.00.

Zaid will calculate his Zakaat of the business as follows: 

  R250 000.00 (50% of the assets)
–  R30 000.00 (50% of the loan repayment)
—————
   R220 000.00 Zakataable

In the above scenario, due to Zaid and Bakr being 50% shareholders of the business, both will discharge Zakaat on R220 000.00 which is R5500.00. Over and above the business Zakaat, if Zaid has personal cash at home or in a savings account, jewellery in the form of gold and silver, investments, etc. then he will have to discharge Zakaat on those personal assets as well.

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.

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