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Zakat on CPF

How to Calculate Zakat on CPF

A Muslim who is obligated (wajib) to pay Zakat CPF is allowed to choose between the two religious approaches regarding Zakat on CPF savings which is as follows:

Approaches:

1st approach to CPF calculation

If a person who receives CPF monies is living comfortably and has no difficulty in paying Zakat every year either through personal savings or in arrears when CPF monies is withdrawn, then he/she is obligated to pay Zakat from the year nisab is reached until withdrawal of CPF monies.

2nd approach to CPF calculation

If a person still has financial commitment and will incur great hardship (eg. still has outstanding loans to pay off) if he/she pays in arrears, Fatwa rules that the person pays Zakat based on 2.5% of the amount received from his/her CPF savings when he/she reaches 55 years old.

Accounts:

Medisave Account

Medisave Account is not accountable for Zakat because its use is restricted to what has been determined by the CPF Board; that is for medical expenses only. It is therefore an incomplete possession and can only be withdrawn when one has passed away.

Special Account

Special Account is also not accountable for Zakat because it is an incomplete possession. The savings can be withdrawn as a retirement fund only.

Ordinary Account

Fatwa Committee has decided that Ordinary Account in one’s CPF is considered as a complete possession. The Ordinary Account can be used for investment, purchasing of house, insurance, etc which is permissible by the CPF Board. This means that Zakat is obligatory to be paid when nisab is reached and haul is completed, although the money is still in the CPF Fund.

Example in Calculating Zakat on CPF

Today's date: 27/12/12
Today's Nisab from the website $6,037

Mr Ali, aged 55 years old, had worked for 15 years before withdrawing his CPF savings. His CPF can be withdrawn and he wishes to pay his Zakat on CPF savings.

Year Ordinary
Account
(A) ($)
Accumulated
Previous Years'
Zakat
(B) ($)
Total
(A-B) ($)
Zakat Payable
(A-B) x 2.5% ($)
1998 6,500 0 6,500 162.50
1999 10,274 162.50 10,112.50 252.81
2000 13,236 415.31 12,820.69 320.52
2001 17,856 735.83 17,120.17 428.00
2002 16,786 1,163.83 15,622.17 390.55
2003 20,743 1,554.38 19,188.62 479.72
2004 23.892 2,034.10 21,857.90 546.45
2005 27,432 2,580.55 24,851.45 621.29
2006 32,749 3,201.84 29,547.16 738.68
2007 37,598 3,940.52 33,657.48 841.44
2008 40,008 4,781.96 35,226.04 880.65
2009 45,643 5,662.61 39,980.39 999.51
2010 49,970 6,662.12 43,307.88 1,082.70
2011 53,452 7,744.82 45,707.18 1,142.68
2012 58,961 8,887.50 50,073.50 1,251.84
Total Zakat Payable 10,139.34


Example Using First Approach

The obligatory Zakat payable after CPF withdrawal is:
= Total Zakat Payable
= $10,139.34 

Example Using Second Approach

Amount of CPF Savings withdrawn from the Ordinary Account in 2012 is $58,961.00.
The obligatory Zakat payable after CPF withdrawal is:
= $58,961 x 2.5%
= $1474.03