Other long-term liabilities may not make the front page, but in 2025 they are quietly reshaping the financial landscape for Australian households and businesses alike. From lease obligations to deferred tax and even environmental provisions, these debts are more than just accounting footnotes—they’re crucial to understanding your true financial position and planning for the future.
What Are ‘Other Long-Term Liabilities’?
Unlike standard long-term loans or mortgages, other long-term liabilities capture a diverse set of debts and obligations that stretch beyond one year. These might include deferred tax liabilities, long-term lease commitments under AASB 16, environmental remediation provisions, and certain employee benefit obligations.
- Deferred tax liabilities: Arise when tax expense is lower than tax payable due to timing differences, such as asset depreciation rules.
- Lease liabilities: Following AASB 16, most leases (including many previously off-balance-sheet) must now be shown as long-term liabilities.
- Provisions: For example, costs to restore a mining site or decommission equipment, which can be significant for certain industries.
- Employee benefits: Long-service leave and other post-employment benefits.
For individuals, these may appear less often, but can include long-term payment plans, HECS-HELP student loan repayments, or deferred settlement on property purchases.
2025 Policy Updates and Why They Matter
This year, several changes are influencing how these liabilities are calculated and disclosed:
- AASB 2025-1: The Australian Accounting Standards Board has updated guidance for recognising environmental provisions and contingent liabilities, requiring more transparency for businesses in mining, manufacturing, and infrastructure.
- Tax reform impacts: With the Albanese government’s ongoing tax reform rollout, deferred tax liability calculations—especially for investment property owners—are being affected by tweaks to negative gearing and capital gains rules.
- Lease accounting evolution: More SMEs are now required to apply AASB 16 rules, bringing many previously undisclosed leases onto the balance sheet, altering key financial ratios.
For example, a regional construction firm with several leased vehicles and equipment must now show those as liabilities, impacting their ability to borrow or attract investors. Similarly, a family running a small business from a leased shopfront may find their reported liabilities rising, even if their cash flow hasn’t changed.
Why Other Long-Term Liabilities Matter for Your Financial Health
It’s tempting to gloss over anything labelled “other,” but ignoring these liabilities can be risky:
- True debt picture: Lenders and investors consider all liabilities, not just loans, when assessing risk.
- Cash flow planning: Some liabilities, such as restoration provisions, may require large outlays in future years, so failing to plan can spell trouble down the track.
- Tax surprises: Deferred tax liabilities often reverse, leading to bigger tax bills in future years if not managed carefully.
- Business sale or succession: Overlooking long-term liabilities can derail business valuations or succession plans.
For individuals, student loans or long-term payment plans can affect credit scores and borrowing capacity. For businesses, rising lease liabilities might make it harder to meet banking covenants—even if day-to-day finances remain healthy.
Real-World Examples: 2025 and Beyond
- Tech startup: An app developer leasing servers and office space now faces increased balance sheet liabilities, which could alter investor perceptions and fundraising prospects.
- Tradie business: A plumbing company with vehicle leases and an equipment hire contract sees its reported liabilities spike, impacting its eligibility for new equipment finance.
- Household HECS-HELP: A couple planning to buy their first home must factor in their combined student debt—which is indexed at 4.7% in 2025—when working out their borrowing power.
The message: other long-term liabilities aren’t just abstract accounting entries—they’re a real part of your financial story.
Strategies for Managing Other Long-Term Liabilities
- Regular reviews: Businesses should regularly review their balance sheet and re-forecast cash flows considering updated liability figures, especially after significant policy changes.
- Communicate with lenders: If new accounting rules inflate your reported liabilities, talk to your bank or financier early to explain the context.
- Plan for reversals: Understand when deferred taxes or other provisions might reverse, and prepare for their cash flow impact.
- Household budgeting: For individuals, include long-term debts like HECS or payment plans in all major financial decisions.
Looking Forward: The Importance of Staying Informed
As Australian financial regulations continue to evolve, the definition and disclosure of other long-term liabilities will only grow in importance. Whether you’re running a business, managing a household, or considering an investment, keeping an eye on these often-overlooked debts is essential for long-term financial success.
