The ins and outs of paying CSOS levies, and why it really matters

Let’s break down the what, why, and how of CSOS levies (without the legal jargon).

If you live in a complex, estate, block of flats, or any other kind of community scheme in South Africa, you’ve probably heard of CSOS (the Community Schemes Ombud Service). But what exactly is it, and why are you paying them a levy?

CSOS (pronounced “see-soss”) was set up in 2016 to help manage and resolve issues in community living. Instead of dragging every dispute through the courts, CSOS gives people a much easier, more affordable way to sort things out.

Whether it’s a noisy neighbour, dodgy trustees, or clashing opinions over finances, CSOS is there to keep things fair and peaceful.

The CSOS Act has three big goals:

1. Help resolve disputes in community schemes.
2. Promote good governance.
3. Educate owners and residents about their rights and responsibilities.

To keep CSOS running and providing these services, every community scheme in South Africa must pay a CSOS levy. And where does this levy come from? From each individual unit owner in the scheme.

So, if you own a flat or townhouse in a sectional title scheme or estate, a small part of your monthly levies goes toward the CSOS levy. It’s not a separate bill (your community scheme includes it in the monthly levy you already pay).

Yes. Not everyone has to pay the CSOS levy. You may qualify for exemption or a discount if you fall into one of these categories:

• Your monthly levy is R500 or less,
• You receive a SASSA grant,
• You are in frail care, assisted living, or mid-care living,
• Your monthly household income is under R5,500.

If that’s you, you can apply to CSOS using the procedure set out in their Practice Directive.

It’s not a flat fee, but rather depends on how much your monthly levy is. Here’s the formula:

(Your monthly levy – R500) x 2%

Only the amount over R500 is taxed, so if your levy is exactly R500 or less, you pay nothing. If it’s R1,000 per month, your CSOS levy would be:

(R1,000 – R500) x 2% = R10 per month

You don’t have to do anything separately, your community scheme collects the CSOS levy from each owner every month. Then, four times a year (end of March, June, September, and December), the scheme must pay all those levies over to CSOS.

So, even though you pay monthly, CSOS gets paid quarterly by the scheme, not the individual.

If your community scheme doesn’t pass on the levies to CSOS, there are serious consequences:

• 2% interest per month is charged on the unpaid amount (that’s 24% a year),
• According to the CSOS Act, someone could face a fine, jail time of up to 5 years, or both,
• Repeat offenders? The sentence could go up to 10 years.

So it’s in everyone’s best interest to stay compliant.

To avoid trouble, schemes are required to follow normal debt collection procedures to recover any unpaid levies from unit owners.

Over time, CSOS has released official documents (called Practice Directives) to explain how levy payments should work. The two most important ones are:

Practice Directive No. 1 of 2018

This one explains:

• The difference between scheme levies and CSOS levies,
• When and how community schemes must pay CSOS,
• What happens in tricky situations (like “scheme within a scheme” setups),
• What reference numbers and bank details to use,
• What happens if the scheme doesn’t pay.

This directive is a must-read for managing agents and trustees.

Practice Directive No. 2 of 2019

This updated a few things:

• A new email address for schemes that haven’t received a CSOS reference number,
• A reminder to inform CSOS when a scheme changes its managing agent,
• More details on exemptions and waivers for unit owners.

Both directives help make sure everyone’s on the same page about paying levies the right way.

Understanding community scheme laws can get a bit technical and mistakes can be costly. That’s where our legal advisory experts come in. If you’re a trustee, managing agent, or concerned owner, don’t hesitate to ask for guidance.

At STS, we offer legal advice tailored to community schemes, to help you stay compliant, avoid penalties, and make informed decisions.