Non-Current Liabilities Explained: Examples & How They Work (2026)

August 18, 2026 3 Min Read

Non-current liabilities are debts a business doesn’t have to pay off within the next 12 months. Long-term loans, lease deals, and deferred tax all sit here, instead of with the bills due this quarter.

Splitting debt this way matters, then, because it tells a lender or investor how much pressure a business is under right now, versus what it owes further down the track.

For a closer look at a related topic, see our guide to What Is a Journal Entry? Format, Types & Examples (2026).

Quick Answer

Non-current liabilities are obligations due more than 12 months from the balance sheet date. Common examples include long-term bank loans, lease debt under AASB 16, bonds payable, and deferred tax. They sit on the balance sheet, apart from current liabilities, which are due within a year.

Non-Current Liabilities vs. Current Liabilities

The split comes down to one thing: timing.

Current liabilities are due within 12 months — supplier bills, short-term loans, and the part of a long-term loan due this year.
Non-current liabilities are due after 12 months — the rest of that same loan, plus other long-term deals.

A single loan, then, often gets split across both categories. The part due this year counts as current. The rest counts as non-current.

Common Types of Non-Current Liabilities

A handful of items, then, show up again and again on a typical balance sheet:

Long-term bank loans, where repayment then stretches past 12 months.
Lease debt, recognised under AASB 16 for most leases now, covering the present value of future lease payments.
Bonds payable, for larger firms that instead raise debt through the bond market.
Deferred tax, arising when book profit and taxable profit then diverge in timing.
Long-service leave pay, for staff entitlements not due within a year.

Why AASB 16 Changed Things for Leases

Before AASB 16, then, many leases stayed off the balance sheet entirely, tracked only as a note. That changed. Now, most leases get recognised as both an asset and a debt, split between the near-term and longer-term parts based on when each payment falls due.

For a business leasing office space or gear on a multi-year deal, this means a debt now shows up on the balance sheet that wouldn’t have appeared under the old rules. It’s a real shift in how leased assets get reported, not just a footnote.

Why Non-Current Liabilities Matter

Lenders and investors read this split closely, then. A business drowning in current liabilities, next to its current assets, faces a real short-term cash squeeze. One carrying mostly non-current liabilities has more breathing room instead, even if the total debt looks the same.

The debt-to-equity and gearing ratios both lean on this split, too. Getting the current-versus-non-current split right isn’t just tidy bookkeeping — it changes what those ratios actually say about the business.

Common Mistakes

A few errors, then, show up often:

Sorting the wrong part as current. Only the next 12 months of a loan belongs in current liabilities; the rest stays non-current.
Forgetting lease debt entirely. Under AASB 16, most leases need recognising on the balance sheet now, not just in the notes.
Ignoring deferred tax. It’s easy to overlook, but it still counts as a real non-current liability once it exists.
Never revisiting the split. As loan balances get paid down, more of what was once non-current turns current each year.

FAQ

What are examples of non-current liabilities?
Long-term bank loans, lease liabilities under AASB 16, bonds payable, deferred tax liabilities, and long-service leave provisions are common examples.

What’s the difference between current and non-current liabilities?
Current liabilities are due within 12 months. Non-current liabilities, then, are due after that. A single loan can be split across both, based on repayment timing.

Are lease liabilities non-current?
Often partly. The part due within 12 months counts as current, so the remainder counts as non-current instead, under AASB 16.

Why does the current/non-current split matter?
It shows how much financial pressure a business faces in the near term versus later, and it feeds directly into ratios like gearing and debt-to-equity.

Is a mortgage a non-current liability?
The part due beyond 12 months is non-current. The next year’s worth of repayments, though, counts as a current liability instead.

Do non-current liabilities appear on every balance sheet?
Most businesses with any long-term debt, leases, or deferred tax will show non-current liabilities. A very small, debt-free business might not have any.