What Is Zakatable?

Zakat does not apply to everything you own. It applies to growing wealth, what the classical scholars called al-mal al-nami, wealth that has the capacity for increase. The scholars used a helpful metaphor to illustrate this: trim your hair, and it grows back stronger. That is zakatable wealth. Your house, on the other hand, is like a hand. Cut it off, and it does not grow back. That is not zakatable.

Three Categories

All zakatable wealth ultimately reduces to three things:

1. Your money. This includes cash, bank accounts, savings, crypto, and foreign currency. If it is money or acts like money, it is zakatable. This also includes money you have lent to others, because it is still yours even if someone else is holding it.

2. Your gold and silver. This covers bullion, coins, and jewelry, though there are some scholarly differences on whether personal-use items like a wedding ring are included.

3. Your trade goods. This means anything you bought with the intention to sell for profit, including inventory, trade stock, and property purchased for resale.

Everything else, your home, your car, your furniture, your CPP, your locked pension, is not in the calculation. If it is not money-like and you did not buy it to sell it, it is not zakatable.

Modern financial instruments all reduce to these same three classical categories. Stocks and ETFs hold money and trade goods. RRSPs and TFSAs are wrappers around the same underlying assets. Crypto is money. The categories are ancient, but they map cleanly onto the modern financial landscape.

The Formula

Once you know what is zakatable, the math is straightforward:

Zakatable Assets - Eligible Deductions = Zakatable Net Worth

Zakatable Net Worth x 2.5% = Your Zakat

For the full breakdown of each category, how modern investments map to them, and what is explicitly not zakatable, see Zakatable Wealth: Money, Gold, Silver & Trade Goods.