Islamic Khums Seminar: "Khums: The Islamic Tax" Shaykh Saleem Bhimji
Friday, January 19th 2018 2nd Night of Jamadi-ul-awwal 1439
ISIA Edmonton, AB www.jammat.org
QUESTION 1. There is no Khums on a Loan – so what if a person takes a loan or uses their Line of Credit to purchase RESP or RRSP? a. ANSWER: There is no Khums on loans, however when you take the loan and purchase an RESP or RRSP or any product, that investment or product is now yours. If you don’t use that investment or product in the first year, it is savings and thus, is Khums-liable. This would apply for anything. If you get a loan to buy clothing, jewellery, electronics and don’t use that item for one year, you must pay Khums on it. Similarly if you have an RESP or RRSP, then after one year, there is Khums liable on it.
QUESTION 2. Money that students get – scholarship for good grades, or a grant for research work, etc. a. ANSWER: As it is a gift from the school or learning institut, then if the Marja’ whom you follow says that there is Khums on gifts, then you must pay Khums on it IF it stays with you for ONE YEAR.
QUESTION 3. Maternity leave – savings to cover maternity leave is khums-able as savings, but someone who works month to month and pays bills monthly based on their regular income does not pay khums. a. ANSWER: Speak to representative of the Marja’ Taqlid whom you follow with your specific case and they will determine what you need to do.
QUESTION 4. Grave plot – Is there Khums on it? a. ANSWER: There are multiple scenarios in this question. i. If the plot is owned by the person then there is Khums – for example in some communities, the person may purchase land “back home” in a specific graveyard to be buried and if it is not used within ONE year, then there is Khums on the value. ii. If for example, a community in Canada has a burial project in their Jamaat in which the members contribute an amount for *ANY* plot – they are not given a specific plot, nor do they *OWN* the plot – the Jamaat merely holds *ANY* plot for them, then there is NO KHUMS on this amount. iii. If for example, a community in Canada has a burial project in their Jamaat in which the members contribute an amount for *A* plot – meaning they are reserved ONE specific plot and own *A* plot in that graveyard, then there is Khums applicable on that.
QUESTION 5. Burial schemes – is that a type of insurance policy which is khums-free or khums-liable as it is a type of savings. a. ANSWER: No khums on Jamaats or institutions which offer a “burial scheme” to their members in which they pay yearly premiums.
QUESTION 6. CPP – money at death given by CPP – currently around $2,500.00 is this Khums-able? a. ANSWER: As this money goes to the estate at the time of death, this money would go into the estate and pooled with the remainder of the estate for the inheritors.
QUESTION 7. OVERPAYMENT of Khums a. ANSWER: If a person OVERPAID Khums in one year, as they did not know the rulings or was misinformed, they CAN offset the Khums on their current year or future years with what was over-paid. For example, if in 2015, a person paid $10,000.00 in KHUMS and in 2018 realized that they were not given correct information about Khums and now in 2018 their Khums is $5,000.00, they can offset their Khums for 2018 and pay 0 and then maintain that overpayment of $5,000.00 and use it in future years.
QUESTION 8. RESP – AN UPDATE to this ruling as the initial opinion, based on what was mentioned by other scholars in Canada, it seemed that it WAS KHUMS LIABLE, however upon further in-depth review of the RESP and how it functions, it is now deemed that an RESP is KHUMS EXEMPT as long as the money stays in the name of the subscribers. HOWEVER, if, when their child goes for post-secondary education and the subscribers GIVE THE ENTIRE AMOUNT to their child, *THEN* it would be come Khums-liable *IF* it stays with the child for more than one YEAR. The subscribers (parents for example) are advised that if they wish to avoid this, then they retain the RESP account and all of its funds and only give that amount that the child needs – starting with the EAP portion in YEAR ONE and then taking from the PSE portion in the subsequent years of studies.