Tax cuts for small Australian businesses will become law after the main opposition Labor party said on Friday it will back the proposal, robbing new Prime Minister Scott Morrison of a potential political win ahead of an election due by May.
Morrison said on Thursday his government wanted to accelerate tax cuts for businesses with a turnover of less than A$50 million ($35.64 million) to 25 per cent, down from 27.5 per cent.
Labor, which enjoys a healthy lead in opinion polls after months of political infighting in Morrison's centre-right coalition government, said it would support the legislation to provide certainty for businesses.
"We aren't going to let small business become a political football that is dragged around the oval," Labor leader Bill Shorten told reporters in Melbourne.
Labor's offer of bipartisan support for the tax cuts after earlier opposing them has dented Morrison's hopes of clawing back support in the polls.
Morrison's plan was seen as an attempt to drive a wedge between voters and Labor over their opposition to the cuts.
Morrison must call an election by May 2019, although political polls indicate the government is on course for a heavy election defeat.
He also faces a critical by-election next week to replace former prime minister Malcolm Turnbull, who resigned from parliament after losing the lead in a party-room ballot in August.
Should the government lose the affluent electorate of Wentworth, a traditionally safe Liberal seat that stretches from Bondi Beach to Sydney Harbour, Morrison would then have to strike a new agreement with independent lawmakers in parliament to continue in a minority government.
(With inputs from agencies.)