Understanding the third pillar of Islam — who pays, how much, and to whom. A practical guide for Muslims in Canada.
What is Zakat?
Zakat is one of the five pillars of Islam. It is a mandatory annual payment on wealth that has been held for a full lunar year (known as the hawl) above a minimum threshold (the nisab). It isn't charity in the conventional sense; it's an obligation, a purification of wealth, and a right that eligible recipients hold over the wealth of those who possess more than they need.
Who Pays Zakat?
If you're a Muslim and your net zakatable assets exceed the nisab on your zakat anniversary date, you owe zakat. The nisab threshold is traditionally set at the value of either:
- 85 grams of gold, or
- 595 grams of silver
There's scholarly disagreement about which standard to use. The silver nisab is significantly lower, which means more people would be obligated to pay. Most scholars in the Hanafi school historically favoured the silver standard, while many contemporary scholars lean toward the gold standard. The choice matters — you can explore this in depth in our article on Gold or Silver? The Nisab Standard.
How Much is Zakat?
The standard rate is 2.5% of your total zakatable wealth. This applies to:
- Cash and savings — bank accounts, GICs, term deposits
- Gold, silver, and precious metals — jewelry (with scholarly differences on personal-use jewelry), bullion, coins
- Investments — stocks, mutual funds, ETFs, RRSPs, TFSAs
- Business assets — inventory, receivables, cash on hand
- Money owed to you — personal loans you've extended to others
Debts you owe are subtracted from your total before calculating zakat.
The Eight Recipients
The Quran specifies exactly eight categories of people eligible to receive zakat (Surah At-Tawbah, 9:60):
- Al-Fuqarā' — The poor (those without sufficient means)
- Al-Masākīn — The needy (those who have some, but not enough)
- Al-'Āmilīn — Those employed to collect and distribute zakat
- Al-Mu'allafa Qulūbuhum — Those whose hearts are to be reconciled
- Fī al-Riqāb — Those in bondage (freeing slaves/captives)
- Al-Ghārimīn — Those in debt
- Fī Sabīlillāh — In the cause of God
- Ibn al-Sabīl — The wayfarer (stranded traveler)
Each category has nuances — organizations interpret and apply them differently. Our Zakat Categories Explained article breaks down what each means in practice for Canadian organizations.
How is Zakat Different from Sadaqah?
| Zakat | Sadaqah | |
|---|---|---|
| Obligation | Mandatory | Voluntary |
| Rate | Fixed at 2.5% | Any amount |
| Recipients | 8 specified categories | Anyone in need |
| Timing | Annual (on your hawl date) | Anytime |
| Wealth threshold | Must exceed nisab | No threshold |
Where Do I Pay Zakat?
You have options:
- Directly to eligible recipients — You can give zakat directly to someone who qualifies, which is perfectly valid.
- Through an organization — Many Muslims choose to give through established organizations that identify and verify recipients. This is where ZakatView's Directory comes in — it helps you understand how each organization handles your zakat.
When choosing an organization, key questions to consider:
- Do they separate zakat funds from general donations?
- What percentage goes to admin costs, and how are those funded?
- Which recipient categories do they serve?
- Do they have scholarly oversight?
Explore Canadian Zakat organizations — see how each one handles fund separation, admin costs, recipient categories, and scholarly oversight.
Ready to figure out what you owe? Our calculator walks you through each category of wealth step-by-step and calculates your obligation automatically.
Sources
- Quran 9:60 — the verse establishing the eight categories of Zakat recipients
- Quran 2:43 — "Establish prayer and give Zakat" — one of many verses commanding Zakat as an obligation
- Hadith (Bukhari & Muslim) — "Islam is built on five pillars…" including Zakat as the third pillar
- Hadith of Mu'adh ibn Jabal (Bukhari & Muslim) — the Prophet ﷺ instructing that Zakat be taken from the wealthy and given to the poor