Non-current liabilities
Non-current liabilities are debts due after 12 months. See examples and how Singapore businesses classify them.
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 balance sheet date. They're also called long-term liabilities.
- The part of a long-term loan due within the next 12 months moves to current liabilities.
- In Singapore, a liability is non-current if, at the end of the reporting period, you can defer settlement for at least 12 months.
- Adding long-term debt repayments to your cash flow forecast shows whether you can meet them and still fund growth.
What are non-current liabilities?
Non-current liabilities are debts your business owes that aren't due for at least 12 months after the balance sheet date, based on the current and non-current tests in IAS 1. They're also called long-term liabilities.
Say you run a café and take out a five-year bank loan of SGD 60,000 for kitchen equipment. You repay it in monthly instalments, but most of the balance falls due in later years, so that portion sits in non-current liabilities.
Current vs non-current liabilities
The difference between the two comes down to timing. To classify any debt, ask one question: will it be repaid within the next 12 months?
Here's how the two groups compare:
- Current liabilities are due within 12 months, such as supplier bills and short-term loans.
- Non-current liabilities are due after 12 months, such as long-term bank loans and multi-year leases.
- Current liabilities reduce your working capital, because you pay them from cash and other short-term assets.
- Non-current liabilities show how much of your business runs on long-term borrowing.
Many long-term loans sit across both groups. The instalments due in the next 12 months are the current portion, so they move to current liabilities while the rest stays non-current. If SGD 12,000 of the café's SGD 60,000 loan is due this year, that SGD 12,000 is current and the other SGD 48,000 is non-current.
Examples of non-current liabilities
Most small businesses carry one or two kinds of long-term debt. Common non-current liabilities include:
- long-term bank loans and property mortgages
- bonds or debentures, which companies issue to borrow money from investors
- long-term lease liabilities, for example, a multi-year shop or office lease
- deferred tax liabilities, which are taxes you'll pay in a later period because accounting and tax rules recognise income at different times
- long-term provisions, such as the estimated cost of restoring leased premises when the lease ends
- loans from directors or related parties that aren't repayable within 12 months
A bank overdraft or line of credit is usually a current liability, and IAS 1 paragraph 71 lists bank overdrafts among its examples of current liabilities. A facility only counts as non-current when it gives your business the right to defer repayment for at least 12 months.
Non-current liabilities on the balance sheet
Non-current liabilities appear on your balance sheet, also called the statement of financial position, below current liabilities. Many businesses group loans and similar debts under a heading such as long-term borrowings.
The balance sheet is one of the core financial statements, and it follows the accounting equation: assets = liabilities + equity. At year end, the café's balance sheet might show:
- current liabilities of SGD 20,000, including the SGD 12,000 loan portion due this year
- non-current liabilities of SGD 48,000, grouped as long-term borrowings
- total liabilities of SGD 68,000
- equity of SGD 52,000
- total assets of SGD 120,000
The two sides balance because liabilities and equity together fund every dollar of the café's assets.
How Singapore accounting rules classify liabilities
Companies reporting under Singapore Financial Reporting Standards (International), or SFRS(I), use SFRS(I) 1-1 to split liabilities into current and non-current. The amendments to SFRS(I) 1-1 on this classification apply to annual reporting periods beginning on or after 1 January 2024.
A liability is non-current when, at the end of the reporting period, your business has a right to defer settlement for at least 12 months. SFRS(I) 1-1 is based on International Accounting Standard 1 (IAS 1), because Singapore's accounting standards are based on IFRS Accounting Standards, so the same test applies internationally. From 2027, IFRS 18 replaces IAS 1 and carries forward many of its requirements.
Loan covenants can also affect the answer. The Institute of Singapore Chartered Accountants (ISCA) covers this, and ISCA's guidance explains that only covenants you must comply with on or before the end of the reporting period affect classification. If any of your loans come with covenants, ask your accountant to confirm how to classify them.
Why non-current liabilities matter for your business
Long-term debt isn't due in full this year, but you may still make regular payments toward it, such as monthly loan instalments. Include those payments in your cash flow forecast to check you can pay future debts and still have cash to grow.
Lenders and investors also study your long-term debt to judge solvency, which is your ability to meet obligations over the long term. They check your gearing too, which compares debt with equity to show how much of your business is funded by borrowing.
Reading these measures alongside liquidity ratios, which focus on short-term obligations, gives you a full view of your financial health before you apply for new finance.
Track long-term liabilities with Xero
Knowing what you owe and when it's due helps you plan repayments with confidence. Xero keeps your balance sheet up to date, so you can see current and non-current liabilities at a glance in your financial reports.
Bank reconciliation matches each loan repayment to your records, and you can track every loan balance as you pay it down. To see how it works for your business, 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 long-term bank loan is usually split: instalments due within the next 12 months are current, and the balance due later is non-current. A short-term loan repayable within a year is entirely current.
Is deferred tax a non-current liability?
Yes. When your balance sheet splits current and non-current items, IAS 1 paragraph 56 doesn't allow deferred tax liabilities to be classified as current. They arise when tax falls due later than the related profit appears in your accounts, for example, when capital allowances run ahead of depreciation.
What's the difference between non-current liabilities and non-current assets?
Non-current liabilities are long-term debts you owe, while non-current assets are long-term resources you own, such as property and equipment. Businesses often use a non-current liability, like a mortgage, to buy a non-current asset.
Are accounts payable a non-current liability?
Accounts payable are current liabilities, because supplier bills are usually due within weeks or a few months. That's well inside the 12-month test.
What are the 3 main parts of a balance sheet?
The three main parts are assets, liabilities and equity. Both assets and liabilities are then split into current and non-current items.
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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.