The Turnbull government will abandon its company tax cuts for larger companies after the legislation was defeated in the Senate.
Prime Minister Malcolm Turnbull said the coalition wouldn't take the unpopular policy to the next federal election, scrapping the government's push to lower the company tax rate from 30 to 25 per cent.
Instead, the coalition will look at bringing forward already legislated cuts for businesses turning over $50 million.
"We are going to review our enterprise tax plan insofar as it applies to small and medium businesses," Mr Turnbull told reporters in Canberra on Wednesday.
The backdown came after the government failed to win the support of key crossbench senators, despite a compromise of carving out the big four banks.
"We have to recognise in all of this, and in all contexts, the iron laws of arithmetic and we have not been able to secure the support of the Senate," Mr Turnbull said.
Treasurer Scott Morrison said it was a great shame One Nation and Labor had voted against the policy.
The government's chief negotiator and Senate leader Mathias Cormann said there had been no stone left unturned in talks with crossbenchers.
"We will now focus on how best to proceed into the future, prioritising small- and medium-sized business," Senator Cormann said.
