As Australian businesses move into 2025, understanding noncurrent liabilities is crucial for making informed financial decisions and maintaining a healthy balance sheet. Whether you’re a startup scaling up or an established company navigating new economic realities, how you manage your long-term obligations can define your growth trajectory and resilience.
What Are Noncurrent Liabilities?
Noncurrent liabilities—sometimes called long-term liabilities—are financial obligations not due for settlement within the next 12 months. Unlike current liabilities such as accounts payable or short-term loans, noncurrent liabilities represent debts and commitments that extend further into the future. Typical examples include:
- Long-term loans and bonds (e.g., commercial mortgages, debentures)
- Leases (e.g., property or equipment leases extending beyond one year)
- Deferred tax liabilities
- Employee benefit obligations (such as long service leave provisions)
These liabilities play a pivotal role in how a business funds expansion, invests in infrastructure, and manages cash flow over the long haul.
2025 Policy Shifts and Regulatory Updates
This year, several policy changes and economic trends are affecting how Australian businesses manage noncurrent liabilities:
- Rising Interest Rates: The Reserve Bank of Australia (RBA) has maintained a higher cash rate through 2025, impacting the cost of servicing long-term debt. Businesses with variable-rate loans are seeing increased repayments, making debt structuring and refinancing more critical than ever.
- Changes to Lease Accounting (AASB 16): The Australian Accounting Standards Board (AASB) continues to enforce rigorous lease reporting standards, requiring most leases over 12 months to be recognised as liabilities on the balance sheet. This change has made it more transparent for stakeholders to assess a business’s true leverage and risk profile.
- Taxation Updates: The 2025-26 Federal Budget introduced amendments to deferred tax liability calculations, particularly around the treatment of asset revaluations and accelerated depreciation for green investments. Businesses investing in renewable energy assets may now recognise different deferred tax implications, affecting their long-term liability profile.
Staying current with these policy shifts is essential for accurate financial reporting and strategic planning.
Real-World Examples: How Noncurrent Liabilities Impact Business Decisions
Let’s look at two Australian businesses navigating noncurrent liabilities in 2025:
- Tech Startup Expansion: A Melbourne-based SaaS company secures a five-year equipment lease to upgrade its servers. Under AASB 16, the lease is capitalised as a noncurrent liability, increasing the company’s debt-to-equity ratio but providing the infrastructure needed for growth. The CFO regularly reviews lease terms as interest rates fluctuate, ensuring the business isn’t overleveraged.
- Family-Owned Manufacturer: A Queensland manufacturer takes on a 10-year loan to install solar panels, capitalising on new government incentives. While the loan boosts noncurrent liabilities, the firm benefits from reduced energy bills and new tax offsets, improving its overall financial position.
In both cases, strategic management of noncurrent liabilities enables businesses to fund expansion and innovation while maintaining financial stability.
Best Practices for Managing Noncurrent Liabilities in 2025
Given the evolving landscape, here are key strategies for Australian businesses:
- Regularly Review Debt Structures: Refinance long-term loans when favourable terms arise, and monitor interest rate trends to manage repayment risks.
- Leverage Technology: Use accounting software that complies with the latest AASB standards to accurately track and report noncurrent liabilities.
- Plan for Tax Implications: Work with your finance team to model how deferred tax liabilities from asset purchases or revaluations will impact your bottom line.
- Communicate Clearly: Provide transparent reporting to stakeholders and investors about your long-term obligations and the strategies in place to manage them.
Effective management of noncurrent liabilities isn’t just about compliance—it’s about building a business that can weather uncertainty and seize new opportunities.
