This study explores in the first instance the donations tax implications, specifically in the context of Part V of Chapter II of the Income Tax Act No. 58 of 1962 (“the Act”), and in the second instance the capital gains tax implications of interest-free loans. It is concluded, specifically in light of the relevant statutory definitions as contained in Part V of Chapter II of the Act, that the ... [Show full abstract] granting of an interest-free loan should arguably not result in any liability for donations tax in this regard. However, in light of certain problematic statements of the Supreme Court of Appeal on this issue, it is submitted that it cannot be concluded with certainty that interest-free loans will never give rise to donations tax, as lieved in terms of Part V of Chapter II of the Act. It is further concluded that an interest-free loan could in certain circumstances give rise to capital gains tax consequences for the person granting the interest-free loan, more specifically where another related person realises a capital gain that can be attributed to the granting of the interest-free loan. It is also concluded that the provisions of paragraph 38 of the Eighth Schedule to the Act could in theory also apply in the instances where interest-free loans are granted, as consideration for the disposal of an asset by the person receiving the capital advanced under the interest-free loan. However, the actual practical impact of paragraph 38 of the Eighth Schedule to the Act in these circumstances would be negligible, if any. Thesis (MComm (Accountancy))--University of Stellenbosch, 2007.