Q. 1. I gave a relative a large sum of money to join in an investment project. It is now three years and the project has not started. For the last two years, every time I approached him to return the money he said that he could not do that, and the project would start soon. Do I have to pay zakah on this amount that now appears frozen? How about zakah on a loan the borrower intends to repay, but has not done so for several years?
S.A. Junedi
A.1. Both cases are viewed in the same way. In the second case, the money was advanced as a straightforward loan, but several years have passed without any indication of when the loan was going to be repaid. While in the other case, the money was advanced as an investment, but it now appears to be totally inaccessible. In both cases, the owner need not pay zakah annually on the amounts advanced. When the loan is repaid, whether tomorrow or in a few years’ time, zakah becomes payable immediately, for one year only. Suppose that the borrower gives you your money back in two years from now. He will have held the money for five years, but upon repayment, you pay zakah for the entire amount repaid for one year only. This is due on receipt of the money. It should not wait until your zakah date.
The case is different if the borrower acknowledges the debt, is known to have the money, or even has more, and he is worthy of trust to the extent that the lender has no doubt that at any time he demands repayment, the lender will give him his money back. In this situation, the borrower is holding the money by the lender’s consent, but it remains available to the lender. This case is different because of the availability of the money. In this case, zakah is payable every year, on the lender’s zakah date.
The case of the investment is similar, because you gave the money to your relative and now you are unsure of having any access to it. From what you say, it appears that you have real difficulty in laying your hand on your money. Therefore, only when you are sure that the money is available to you that you need to pay zakah.
Having said that, may I add a word of advice? You need to tie up this arrangement in a satisfactory way as soon as possible. You should have your relative signing proper documents acknowledging your rights and how you can get your money back. Otherwise, you may be in for a real shock should the money be lost.