['Aalim Network QR] Follow-up on Khums

["Akil M. Karim" <amk@io.org>]

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|       In the Name of Allah, the Compassionate, the All-Merciful       |\
|  Greeting of Allah be upon Muhammad and the pure members of his House |\
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Salamun `Alaykum

The following follow-up questions on Khums were kindly answered by 
Maulana Rizvi.

NOTE: For your convenience, I have included the initial question and 
answer on which the follow-up questions are based.


Fee Amaanillah,

Akil Karim
Acting Moderator for ABDG-A

---------- Forwarded message ----------

INITIAL QUESTION:

Does the method of determining the savings (in order to calculate Khums
thereon) have to be one of 'cash basis' or 'accruals basis' or is there a
choice? Does one have to be consistent one way or the other? 

NB: By 'cash basis', I mean deducting last year's bank balances from this
year's to arrive at net savings in the year. By 'accruals' basis, I mean
also taking into account known commitments and amounts recoverable from
other people. 
 
ANSWER:
 
The method of determining the savings has to be on 'cash basis' the way you
have described it in your question. Committments and amounts recoverable
from other people is not liable for khums until you have it in your 
possession.

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The following question was asked recently to which I would like to add a 
further question.  I'd like an answer per Agas Khui and Seestani.
 
FOLLOW-UP QUESTION # 1:

What about money placed into a life insurance policy?  Would Khums have
to be paid on payments into the insurance policy?  Or, the cash surrender
value (which would include the payments into policy + growth)?  Or, when
the policy is actually cashed and saved over a year?  I'd like an answer
to the same question in regards to registered retirement savings plans...
(Khums on?: payments in to plan, total value including growth, when it's
taken out, etc..)

ANSWER:

In case of life insurance, there can be two situations: 

1. If the life insurance is just a means of saving --- then the annual
premium should be taken into consideration when calculating the savings
of that year and khums has to be paid on that amount. 

2. However, if the life insurance policy is taken out against a liability
(e.g., against home mortgage) --- then the premium, in this case, is just
like the premium paid for car insurance and no khums is due on it. 

In either case, when your policy matures and you get paid from the insurance
company --- then that money will be part of your that year's income and
khums will be wajib if it remains with you for one year.


FOLLOW-UP QUESTION # 2:

Does Khums have to be paid on money being saved for a purpose, i.e. to
pay for: education, down payment on home, car, furniture and other
chattel, etc.? 

ANSWER:

If you are saving the money for use in that same year, then obviously there
is no khums in it. But if you are saving the money for a usage in coming
year(s), then you have to pay khums out of it.


Yours in Islam,

Sayyid Muhammad Rizvi