KHUMS (ONE-FIFTH TAX)
This is a right that Allah has imposed on us for Him and His trusted Messenger (peace be upon him and his progeny) and his pure progeny (peace be upon them), as well as Hashimites, their close kin.
This is a means for the believer for purification, to make lawful his wealth, and for growth in his sustenance.
What Khums is Payable On
The five most important categories of properties and gains on which khums is obligatory are the following:
(1) Mined minerals, such as gold, silver and petroleum.
Ruling 354: For khums to apply on mined minerals, the value of the mined goods should reach the value of 20 mithqal of gold – which is approximately 85 grams – after deducting the costs of extracting them from the earth.
(2) Treasure, which is wealth that has been buried in the earth a long time ago and its owner is not known and it is also unknown whether he is a Muslim.
Ruling 355: Buried treasure is liable for khums only if it consists of gold and silver coins minted as currency. Its taxable limit for gold coins is 20 dinars, and for silver coins is 200 dirhams.
(3) What is taken from the seas and rivers by diving or by using tools, such as jewels of the sea and the like, if the items found are not owned by anybody. As an obligatory precaution, the same applied to what comes out of the sea by itself and emerges on the surface or is left by the sea on the coast. This does not apply to animals.
Ruling 356:For khums to be payable on it, the taxable limit must be reached after deducting the costs of extraction, and this is the value of one dinar. As for ambergris, khums is due on it if it is taken from the water surface, even if it does not reach the taxable limit, as an obligatory precaution.
(4) Wealth that has become mixed with unlawful wealth.
Ruling 357: Khums is due on such wealth if the unlawful wealth cannot be distinguished from the lawful wealth, and the actual owner of the unlawful wealth is unknown. Paying the khums from this will then make the remaining wealth lawful for him.
(5) What remains in one’s wealth after deducting his yearly expenses for himself and his family from the earnings from his business, trade, farming, leasings, and anything else he obtains, such as gifts, dowry, wealth received in lieu of a khula’ divorce, wealth that has been bequeathed in a will besides the set legislated inheritance, and inheritance received from a distant relative; if the inheritance is from a close relative, there is no khums on it.
Ruling 358: For something to be regarded as his earnings it is not sufficient that he has become its owner according to the law of the land; rather, it is necessary that he becomes its owner according to the Sharia.
Ruling 359: Wealth from which khums has already been paid, or that on which no khums is due, if it grows and the growth is conventionally seen as directly attached to the original, such as the growth of a tree and an animal becoming fatter, then there is no khums due on it. However, if the growth is seen to be different from the original by convention, like wool from a sheep, milk from a cow and fruit from a tree, khums is obligatory on it, even if it is not separated from the original.
Ruling 360: If the market value of wealth – from which khums has already been paid or khums is not due on it – increases, khums is not obligatory on the increase, except if it is sold and it was previously owned by purchase; so, if something was a gift or inherited and then sold, khums is not payable on the increase of its market value.
Ruling 361: If an item is liable for khums, then it increases by something attached to it such as an animal becoming fatter, or by something separated from it such as giving birth to a baby animal, khums will be due on both the original item and the addition.
Ruling 362: If one bought an item with money on which khums is due, it is obligatory on him to pay the khums of the price paid, whether it is equal to the value of the item bought, or less than it or greater than it.
Ruling 363: The yearly expenses – which are deducted from the total earnings of the year before the payment of khums – refer to all those expenses of the earner for reasonable purposes in order to fulfill the requirements of himself and his family, such as food, drink, clothing, housing, vehicle, fulfilling particular desires, hosting guests, fulfilling obligatory or recommended duties, etc. There is no difference whether the expenses are incurred for a benefit in which the item perishes, such as food and drink, or whether it is spent, such as a loan, or whether they are incurred for a benefit while the item subsists, such as a house.
Ruling 364: The deductible yearly expenses do not include capital for business, nor what is spent on tools and equipments by which one will make an earning, such as a work vehicle or décor for a shop.
Ruling 365: If the earning of profit depends on certain expenses, such expenses are deductible from the profits earned, such as the rent for the shop, or protection of merchandise damage, or taxes, etc.
Ruling 366: The yearly expenses refer to the deductible expenses for the lunar year, and the beginning of the year will be from the day a person earns his first profit in his life. The year-end does not differ if the earnings and profits are from different sources. If a person does not know the year-end in his calculations he should refer to the hakim shar’i in specifying it.
Ruling 367: At the year-end it is obligatory for a duty-bound person to look at what extra unused cash, commodities, items, clothing, books, etc. he has, and they will be included in the profits on which khums is due.
Ruling 368: If the items are benefitted from and they subsist, such as jewelry and clothes, and if they have been used by the person for a period of time usual for such items, and then they are no longer required, one is not obliged to pay khums on them. This is so, unless the person acquired it by buying it and then sells it for a profit, in which case he is liable to pay khums on the profit he makes.
Ruling 369: Just as the yearly expenses and the expenses incurred in making the profit are both deducted from the profit, similarly the losses and damages incurred by the person during the year are also deductible. And it is not necessary that the expenses were paid from the profits themselves; rather, if they are paid from loans, or money on which khums has already been paid, or other sources, the amount will be deductible from the profits.
Ruling 370: When a khums year ends and one has not paid khums from the profits of that year and decided to pay it from the revenues of the following year, then khums is due on the amount that he paid as khums for the previous year, so he should pay it with the rest of the khums on the current year’s profits. This is the case if the previous year’s profits still subsist. If they do not subsist, khums is not due on the said amount.
Ruling 371: Khums becomes payable on profit if it is greater than the year’s expenses as soon as it appears, but the owner may delay its payment until the end of the khums year.
Ruling 372: It is obligatory to hasten to pay khums after the year-end, if the property on which khums is liable on is in his possession, or it is possible for him to take its possession. It is not permissible to delay the payment or to use it, except with the permission of the hakim shar’i, otherwise he will have sinned and will be liable for it.
Ruling 373: Khums is payable on the property, and the owner has the choice of paying its khums from the property itself or paying the value of khums from cash. It is not permissible to pay it from other property, except with the permission of the hakim shar’i.
Ruling 374: If the owner of property on which khums is due makes use or disposes of that property without paying its khums, by selling it or buying with it or giving it as a gift, etc. then his disposal (e.g. the selling, purchasing, gifting) will not be effective, except with the permission of the hakim shar’i. However, if the other party of such dealings is a believer, then it is permissible for him to consider such dealings and transactions as effective and the burden of liability will remain on the person not paying khums.
The Beneficiaries of Khums
Ruling 375: The khums is divided into two equal portions:
(1) The share of the Imam
(2) The share of the Hashimites
Ruling 376: The share of the Imam (peace be upon him) is to be passed over to the hakim shar’i who is acquainted with the general interests of the religion and the needs of the believers, as well as having the means to spend it in these affairs, even if it is through trusted intermediaries who have such acquaintance. The person paying it cannot take it upon himself to spend it.
Ruling 377: The share of the Hashimites is given to anybody whose paternal ancestry goes back to Hashim, the great-grandfather of the Prophet (peace be upon him and his progeny), as long as they are needy believers or believers who are stranded in a journey. As an obligatory precaution, such travelers should not be committing a sin by their travelling. It is not permissible for one to give this share of the khums to somebody who he is obligated to provide for, such as a wife or son. It is necessary to pass over ownership to the beneficiary or his agent by giving him actual possession.
Ruling 378: If somebody claims such ancestry, he is not to be believed unless there are two adil witnesses who confirm it, or it is so well-known amongst the people that it causes satisfaction that it is the truth.