Q1: Do I have to pay zakah on my RRSP or other savings plans like educational savings?
A1: Yes, you have to pay zakah if:
- The amount reaches the nisab (minimum zakahable amount, approximately $11,000 CAD).
- It has been in your possession for a full lunar year.
- You have access to it, even if limited.
Q2: But what if I can only access my RRSP funds after many years (like 20–25 years)?
A2: If you don’t have full access, zakah is calculated based on the accessible portion only.
You are not required to pay on the full amount because penalties and taxes reduce your accessible amount.
Q3: How do I calculate zakah on my RRSP?
A3: Follow these steps:
- Check your RRSP balance (e.g., $50,000).
- Estimate the amount you’d receive today after deducting penalties and taxes.
- Example: You might receive only $41,000–$42,000, not the full $50,000.
- Pay zakah (2.5%) on the net accessible amount, e.g.:
- If $42,000 is accessible, zakah = $1,050.
Q4: Do I need to do this every year?
A4: Yes. Every Ramadan, calculate your RRSP amount, deduct taxes and penalties, and pay zakah on what’s left.
Q5: Does zakah apply to long-term savings (10–20 years)?
A5: Yes, zakah applies every year regardless of how long you plan to save the money.
You just estimate zakah based on the amount you can access, not the total value.
Q6: I haven’t paid zakah on my RRSP for 10 or even 20 years. What should I do?
A6: You must pay zakah retroactively for all missed years.
It’s not enough to say “O Allah, forgive me” — zakah is a right of Allah and the poor in your wealth.