Purification: Removing impure or haram income received from growth on otherwise halal investments.

Purification can be accomplished by donating any small income earned from any impermissible business activities of companies that may have passed shari’ah compliance hurdles, despite halal business and financial screens.

Let’s Look at a Few Examples

A technology firm might have earned income in an interest-bearing bank account, a large business may have sold alcohol as a secondary item, or impermissible entertainment activity may have inadvertently been sponsored or offered by a hospitality company. Although these activities are small, we advise you donate those earnings without receiving direct or indirect tax benefits, recognition, gifts or any other reward in return.

Although Iman Fund follows strict shariah guidelines, we strongly advise investors to purify their investment income as an extra layer of compliance.

Zakat is Not the Answer

Note, these earnings are not permissable to be given away as zakat. Zakat, if you meet the necessary criteria of wealth, requires you to make a charitable contribution to the needy. 

Allied Asset Advisors does not provide tax advice. Please discuss the tax impact of purification with your tax advisor.