Non-current liabilities
Learn what non-current liabilities are, with plain examples and how they show on your balance sheet.
Published Thursday 23 July 2026
Table of contents
Key takeaways
- Non-current liabilities are debts your business isn’t due to repay for at least 12 months, which is why they’re also called long-term liabilities.
- Common types include long-term loans, long-term leases, lines of credit, provisions, deferred tax liabilities, and bonds payable.
- The 12-month test is what separates non-current liabilities from current liabilities on your balance sheet.
- Tracking them helps you plan cash flow, judge your solvency, and understand how much more your business can borrow.
If you’ve taken on debt that stretches beyond the next year, it helps to know how it’s classified.
What are non-current liabilities?
Non-current liabilities are the debts your business owes but isn’t due to repay for at least 12 months. They’re also called long-term liabilities.
Even though payment isn’t due within a year, it’s worth keeping non-current liabilities front of mind. You might still make regular payments toward one, like a loan, during the year.
Sitting alongside your other liabilities, they show the bigger picture of what your business owes over time and appear on your balance sheet.
Types of non-current liabilities
Non-current liabilities cover several kinds of long-term debt. The following are the most common types you’ll come across.
- Long-term loans are amounts you borrow and repay over more than 12 months, such as a bank loan for equipment or premises.
- Long-term leases are lease commitments that run beyond a year, like a multi-year lease on vehicles or machinery.
- Lines of credit are flexible borrowing arrangements you can draw on and repay over the longer term.
- Provisions are amounts you set aside for future costs you expect but can’t pinpoint exactly, such as warranty claims.
- Deferred tax liabilities are taxes you owe but aren’t required to pay until a later period.
- Bonds payable are long-term debts raised by issuing bonds to investors, repaid on a set future date.
Examples of non-current liabilities
Non-current liabilities are the long-term commitments sitting in the background of your accounts. For a New Zealand small business, they often relate to borrowing, leasing, or tax.
Common examples include:
- a bank loan taken out to fund a fit-out or new premises
- a mortgage on a commercial property your business owns
- a lease on vehicles or equipment that runs for several years
- a line of credit you draw on and repay over the long term
- deferred tax liabilities you’ll settle in a future period
Non-current liabilities vs current liabilities
The difference comes down to timing: current liabilities are due within 12 months, while non-current liabilities are due after that. This 12-month window is often called the current versus non-current test.
Current liabilities include things like accounts payable, GST owed, and short-term loans you’ll clear within the year. Non-current liabilities are the longer-term debts that stretch beyond it.
Sorting your debts this way shows what you need to cover soon versus what you can plan for over time.
How non-current liabilities appear on a balance sheet
On a balance sheet, non-current liabilities sit in their own section below current liabilities, grouped by type and ordered by maturity. Maturity order means the debts due soonest are listed first, with the longest-dated ones last.
You’ll usually see them grouped by category, such as long-term loans, leases, and deferred tax, so it’s clear what each amount relates to.
This sits opposite what your business owns, including non-current assets like property and equipment, giving a snapshot of what you own and owe.
Why non-current liabilities matter for your business
Keeping an eye on non-current liabilities helps you plan ahead with confidence. They affect your cash flow, your solvency, and how much more you can borrow.
They matter in three practical ways.
- Cash flow planning is easier when you know which long-term payments are coming and when.
- Solvency, your ability to meet debts over time, becomes clearer when you weigh non-current liabilities against your assets.
- Borrowing capacity depends partly on how much long-term debt you already carry, which lenders check before offering more.
Track your non-current liabilities with Xero
Xero brings your finances together in one place, so your balance sheet stays up to date as you go. You can see your long-term commitments at a glance and plan repayments with less manual admin, so give it a go and Get one month free.
FAQs on non-current liabilities
Here are answers to some frequently asked questions about non-current liabilities.
What’s the difference between current and non-current liabilities?
Current liabilities fall due within 12 months, while non-current liabilities fall due after that. A quick way to check is to ask whether the debt will be settled inside the next year.
Is a mortgage a non-current liability?
Yes, a mortgage on business premises is a non-current liability because it’s repaid over many years. The portion due within the next 12 months is usually shown separately as a current liability.
Are non-current liabilities bad for a business?
Not on their own, since long-term debt often funds growth like new premises or equipment. What matters is whether your income and assets comfortably cover the repayments over time.
Where do non-current liabilities appear on a balance sheet?
They sit in their own section beneath current liabilities, grouped by type and listed in order of maturity. This keeps your shortest-dated and longest-dated debts easy to tell apart.
Related terms
Learn more about non-current liabilities
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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.