Malcolm Turnbull's fight to slash taxes for big business is over, with the government admitting defeat in the Senate.
The prime minister dumped the controversial plan to cut the corporate rate for big businesses from 30 to 25 per cent on Wednesday.
"We will not be taking the tax cuts for larger companies to the next election," Mr Turnbull told reporters in Canberra.
Instead, he said the government will look at bringing forward already legislated cuts for businesses turning over up to $50 million.
Fighting for his own political life, Mr Turnbull was at pains to make it clear his team had done everything it could to get the big company cuts it had promised over the line.
"We've negotiated very hard. We've offered to exclude the big banks," he said.
But the prime minister said the coalition had to acknowledge it didn't have the numbers - or in other words, "the iron laws of arithmetic".
He lamented the end of bipartisan support for cutting company tax after the legislation was defeated in the upper house with minor parties supporting Labor in opposing the plan.
Labor will eventually come around to the idea, Mr Turnbull later suggested.
"Australia needs to have competitive taxes. There is no question about that," he told parliament during question time.
The business community is certainly hoping they will, according to Australian Chamber of Commerce and Industry chief executive James Pearson.
He said the failure of the cuts was a "big disappointment" given they would only have brought Australia up to speed with other nations.
"There was nothing radical about them," he told Sky News.
"It makes sense to us to give Australian businesses of all sizes a fighting chance to stay competitive in an environment where some of our main trading partners and competitors aren't waiting for us - they're cutting their taxes now."
Shadow treasurer Chris Bowen said Mr Turnbull now had no economic plan.
"The parliament has today spoken and defeated his one-point plan," Mr Bowen said.
The Greens and poverty-fighting group Oxfam are also glad to see the back of the cuts.
"Dumping the plan to hand big businesses a tax cut is a major win in the bid to tackle the widening inequality gap in Australia," Oxfam Australia chief executive Dr Helen Szoke said in a statement.
Former minister Peter Dutton, who is weighing up a second challenge to Mr Turnbull, said the tax cuts funding should instead go to households or small businesses.
