Sharia Finance is Not Compliant to Australian Law

Sharia Finance – The Facts:

Much is said about Sharia Finance and yet it needs to be examined carefully and in the evaluation we need to determine if this is wise to have in Australia. Many will dismiss it just because of the violence around many Islamic communities and the proliferation of many Islamic terror groups around the world. While these concerns are real and should be given due weight for social policies, I have chosen to examine Sharia finance closely and to make recommendations based upon factual findings and its relationship with the rest of Australian’s law. To do this we should look at a link giving information for us all so we can examine the facts the best we can. The chosen site is in the link below and I will refer to many issues so raised by this site as I see it. Feel free to click on to the link to check the facts as you go through my post.

Sharia compliant home loans have three important principles:
Instead of charging interest on home loans, a bank must provide some service to earn its profits in accordance with Sharia law. Islamic banks provide accounts that typically purchase assets with your money in order to generate returns.

High degrees of risk are also prohibited under Islamic finance, and all possible risks must be identified to investors clearly.
The third and final core principle of Islamic finance is only ethical causes or projects can be invested in, ruling out anything such as weapons, adult entertainment or gambling. 

A note on these three statements :- (a) The service rendered is calculated at the commencement of the loan and on figures I have worked out are closely related to normal interest rates. The service may simply be managing the house the customer is purchasing. (b) The degrees of risks does not discuss the highest risk and that is the “gifting” of the house to the purchaser at the end of the contract and the relationship between the lender and the family if the father of the household dies before the contract is completed. (c) Ethical causes is always rubbery by being one step away even if by artificial means.

Types of Islamic home loans:

  1. Murabaha: The bank will buy the property for you and will sell it back at a profit. You pay fixed monthly repayments without paying any interest back.
  2. Mudarabah: One partner lends the money to another so they can invest in a property, and each partner shares a responsibility in the loan.
  3. Ijara: The bank buys the property and leases it to you, transferring ownership to you once the loan term ends.
  4. Musharaka: You and the lender buy the property together and you gradually buy the bank out of its share. The more shares you own the less you have to pay the bank.
  5. Wakala: The bank becomes your agent, allowing them to use your money to invest in sharia compliant trading activities.

Problems of Sharia Finance:

  • Sharia finance can only exist under Islamic Law as in Australian law gifting a transfer of property is not enforceable. The process of the purchase of the house under Sharia Finance is a non compliant contract as there will not be found to be a consideration of the transferring of the property.
  • The finance company would have to pay land taxes as the property is a rented property and yet under sharia finance there would be an opposing view.
  • A person purchasing a property for the purpose of renting to others would need to have income tax laws to view this business differently and can only view it under modified tax laws and as such is not acceptable as there is only one law for all Australians in Australia.
  • The Sharia Finance is only available to Muslims and is in breach of anti discrimination laws unless thee has been special provisions for the Islamic communities. If the Islamic communities have special exemptions under the ant-discrimination act then when were the people of Australia so informed of such a decision.


The Christian Democratic Party believe that Australia is one nation with one Law applicable to all Australians. People are welcomed to come to Australia and to become a part of the Australian Communities. We do not support the creating of separate communities segregated on religious, ethnic, or cultural lines as new immigrants enter Australia. See the following links: