What the term covers
BDC defines current liabilities as debts due within a normal operating cycle, usually under 12 months, as opposed to long-term liabilities payable beyond that. Paying them is mandatory, so they matter when you plan cash.
Typical items for an Ontario business include accounts payable, credit card balances, accrued expenses, deferred revenue, a bank line of credit and amounts owing to the Canada Revenue Agency. The part of a long-term loan due in the next year is generally shown as current, even though the loan itself is long term.
Amounts held for the government
Some current liabilities are not really your money. Source deductions withheld from employees must be remitted on a schedule that depends on your remitter type, and GST/HST you collect must be reported and remitted on your return. Until you pay, they sit in current liabilities.
Spending those balances is a common cause of cash trouble, because the cash in the bank is not all available. Corporate income tax owing is a current liability too. Setting these amounts aside in a separate account, and recording them as liabilities when they arise, keeps the balance sheet honest.
An illustrative example
A business owes $18,000 to suppliers, $6,000 in payroll deductions and $4,000 in sales tax, and the next 12 months of a term loan are $10,000. This is illustrative only. Current liabilities are $38,000.
If current assets are $60,000, working capital is $22,000 and the current ratio is about 1.58. If most of those assets are slow receivables or stock, the business can still struggle to pay a bill due next week, so the totals need to be read with a dated cash forecast.
What to discuss with your accountant
Ask whether every obligation is recorded, including accrued costs, unpaid payroll remittances and sales tax, and whether loan balances have been split between current and long-term portions. A missing liability makes the position look stronger than it is.
Lenders often review this section, so confirm what your agreements require. Bring supplier statements, loan schedules, credit card statements and your latest CRA balances, so the year-end figures can be supported line by line.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- BDC: Current liabilitiesBDC
- BDC: LiabilitiesBDC
- When to remit payroll deductions and contributionsCanada Revenue Agency
- General information for GST/HST registrantsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.