Non-current liabilities
Learn what non-current liabilities are, see common examples and how they’re classified in Malaysia.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Non-current liabilities are debts your business doesn’t have to settle for at least 12 months after the reporting date
- Common examples include long-term bank loans, hire purchase, lease liabilities and deferred tax liabilities
- In Malaysia, a liability counts as non-current only if you have the right to defer settling it for at least 12 months
- Tracking long-term debt alongside your cash flow shows whether you can meet future repayments and still grow
What are non-current liabilities?
Non-current liabilities are debts your business owes that aren’t due for settlement for at least 12 months after the reporting date. They’re also called long-term liabilities.
Say you run a café and take out a five-year bank term loan of RM150,000 to fit out your shop. The repayments due in the next 12 months are a current liability, and the rest of the balance is non-current.
You’ll find non-current liabilities on your balance sheet, also called the statement of financial position, listed below current liabilities. Your total liabilities and owner’s equity together show how your business funds its assets.
Examples of non-current liabilities
Long-term debt often pays for equipment, vehicles or premises. Here are the examples of non-current liabilities you’re most likely to see.
- Long-term bank term loans and hire purchase agreements, such as financing for a delivery van
- Lease liabilities for premises or equipment you rent over several years
- Long-term lines of credit or revolving facilities that aren’t due within 12 months
- Deferred tax liabilities, for tax you’ll pay in a later period because of timing differences
- Long-term provisions, such as employee retirement benefits
- Bonds or debentures, which are mainly issued by larger companies
For each of these, only the part of the balance due after the next 12 months counts as non-current.
Current vs non-current liabilities
The 12-month test decides which side a liability falls on. If you must settle it within 12 months of the reporting date, it’s current. If you have the right to push settlement beyond that, it’s non-current.
These are common current liabilities for a small business.
- Accounts payable to suppliers
- Short-term loans and overdrafts
- Tax payable
- Accrued expenses, such as wages owed at month end
- Current portion of long-term debt
The current portion of long-term debt is the slice of a long-term loan you’ll repay in the next 12 months. Each year, part of your non-current balance moves into current liabilities as those repayments come due.
Splitting debt this way lets you work out liquidity ratios, which compare what you owe soon with the assets you can use to pay it.
How non-current liabilities are classified in Malaysia
Businesses that report under the Malaysian Financial Reporting Standards (MFRS) follow MFRS 101 Presentation of Financial Statements. Under this standard, a liability is non-current only if your business has the right to defer settlement for at least 12 months after the reporting date.
Loan covenants can affect that right. The Malaysian Accounting Standards Board (MASB) issued amendments on non-current liabilities with covenants, which apply for annual reporting periods beginning on or after 1 January 2024.
Under these amendments, covenants you only need to meet after the reporting date don’t change how the loan is classified at that date. You’ll still need to disclose information about those covenants in the notes to your financial statements.
A new standard takes over soon. MFRS 18 Presentation and Disclosure in Financial Statements replaces MFRS 101 for annual reporting periods beginning on or after 1 January 2027. You can confirm the timing in MASB’s update on MFRS 101.
Ask your accountant whether MFRS or the Malaysian Private Entities Reporting Standard (MPERS) applies to your business.
Why non-current liabilities matter for your business
Long-term debt still affects your cash this year. Even when the full balance isn’t due for years, you’ll usually make regular repayments on a loan or lease.
That’s why non-current liabilities belong in your cash flow forecast. Comparing upcoming repayments with your expected cash coming in and going out shows whether you can pay future debts and still grow.
They also show your solvency, which is your ability to meet long-term obligations. Lenders weigh your non-current liabilities against your assets and equity before approving new finance, so a clear picture helps you apply with confidence.
Mapping repayments in advance makes managing cash flow easier through quieter months.
Keep track of long-term debt with Xero
See every long-term loan and lease at a glance with an up-to-date balance sheet in Xero. Pull financial reports whenever you need them and spot how repayments affect your cash flow before they fall due. Choose a plan today and get one month free.
FAQs on non-current liabilities
Here are quick answers to common questions about non-current liabilities.
Is a bank loan a current or non-current liability?
A term loan is usually split between both: repayments due in the next 12 months are current, and the remaining balance is non-current. An overdraft that’s repayable on demand is normally treated as current.
Are non-current liabilities bad for a small business?
Long-term debt is often a healthy way to fund assets that help you earn more, such as new equipment or a second outlet. The key is keeping repayments within what your cash flow can comfortably cover.
What’s the difference between non-current liabilities and long-term debt?
Long-term debt usually means borrowings, such as bank loans and hire purchase. Non-current liabilities is the wider category, which also covers items like deferred tax and long-term provisions.
Can a non-current liability become current?
Yes. A loan can move to current if you breach a covenant on or before the reporting date and the lender can then demand repayment, even if the original term runs for years.
Related terms
Learn more about non-current liabilities
Handy resources
Advisor directory
You can search for experts in our advisor directory
Xero Small Business Guides
Discover resources to help you do better business
Financial reporting
Keep track of your performance with accounting reports
Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.