Zakat and Purification on a Mixed-Income Share Portfolio
Puan Aisyah, 47, is a salaried accountant in Kuala Lumpur. She owns 40,000 shares in Syarikat Nur Sdn Bhd, a company her fund manager classifies as Shariah-compliant. The latest audited accounts show 6% of revenue from interest income and 9% from the sale of non-halal beverages. The screening framework applied by the fund manager sets a 5% threshold for interest income and a 20% threshold for non-halal food and beverage revenue. The share price on her zakat date is RM2.50; her original cost was RM1.20. She received RM8,000 in dividends during the year, which now sit in her savings account. Her other zakatable assets are cash savings of RM30,000 (including the dividends) and EPF savings of RM400,000. The nisab is RM24,000, the zakat rate is 2.5%, and her hawl is complete. She asks whether she should pay zakat on the shares at cost or market value, how much purification is due, and whether EPF is zakatable.
1. Compute Puan Aisyah's zakat on her shares and savings, and justify the valuation basis you use.
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Basis. Zakat is a charge on wealth that meets the nisab and completes the hawl. It is not conditional on the asset being Shariah-compliant: a Muslim who holds a non-compliant share still owes zakat on it, although holding it raises a separate compliance question.
Computation. Shares: 40,000 x RM2.50 = RM100,000. Savings: RM30,000. The RM8,000 dividend is already inside the savings figure, so counting it again would double count. EPF: RM400,000 is excluded at this stage because the contributor does not have full disposal of the fund until withdrawal or an accessible account; the common Malaysian practice is to pay zakat on EPF when it is withdrawn or when it becomes accessible, not on the accrued balance each year. Total zakatable wealth = RM130,000. This exceeds the nisab of RM24,000, and the hawl is complete. Zakat = RM130,000 x 2.5% = RM3,250.
Valuation. Market value is the better basis for shares held as an investment or trading asset because it measures the wealth actually available at the zakat date. Cost of RM1.20 would understate her wealth. Some authorities accept net asset value per share or the lower of cost and market; whichever basis is used, apply it consistently and state it in the calculation. If she sells after the zakat date, the zakat already paid is not reversed.
2. Compute the purification amount and explain how the screening thresholds affect whether she may continue to hold the shares.
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Purification removes the non-permissible income element from the dividend. Using the revenue proportion: RM8,000 x 6% = RM480, payable to charity, not to the zakat fund. If the fund manager uses a different ratio (for example non-permissible income divided by total income), use that ratio and show it.
The larger issue. The stated framework has a 5% threshold for interest income and a 20% threshold for non-halal food and beverage revenue. Interest income at 6% exceeds its threshold, so on the fund manager's own framework the share fails the business-activity screen. The 9% beverage revenue is within its 20% threshold, so it is not the trigger. Labelling the stock 'Shariah-compliant' does not cure the breach.
Consequence. She should stop adding to the holding and divest in an orderly way. While she still holds it, purify the dividend and any realised gain attributable to the non-permissible component, and record the calculation. Purification is not a licence to hold a non-compliant stock indefinitely, and it is not a substitute for zakat. If she disagrees with the fund manager's classification, ask for the screening report and the Shariah adviser's basis before acting.
3. Advise on the zakat treatment of the EPF balance and the practical steps Puan Aisyah should take.
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EPF is not treated like a savings account for zakat while it is locked in. The contributor's ownership is incomplete: withdrawal is restricted and the amount accessible is limited. The practice adopted by most state zakat authorities is to charge zakat when the fund is withdrawn or when it becomes accessible (for example at 55 or through an accessible account), not on the full accrued balance every year.
For Puan Aisyah, the practical points are: (1) do not add RM400,000 to this year's base; (2) if she has reached an age or account status that gives her access to part of the EPF, include only the accessible portion; (3) keep a record of EPF withdrawals so that zakat can be paid on them in the year of receipt. Because state practice varies, confirm the method with the relevant state zakat authority rather than applying a single rule across states. This keeps the calculation defensible and avoids both underpayment and double payment.