Companies with annual turnovers of less than $50 million will have their tax rate cut to 26 per cent under a federal government move backed by Labor.

On Thursday, Prime Minister Scott Morrison announced his government would bring forward tax cuts for companies with annual turnovers less than $50 million.

The tax rate for those small-, to medium-sized companies has already been reduced from 30 to 27.5 per cent and is scheduled to go to 25 per cent by July 2026. But the Coalition wants to bring the cuts forward, to see the plan implemented five years earlier.

On Thursday, Opposition Leader Bill Shorten said he was keeping an open mind on the proposal and was not ruling it in or out.

But on Friday, Mr Shorten and Shadow Treasurer Chris Bowen said they had looked at the numbers and decided to support the plan.

“We’re prepared to compromise in the national interest,” Mr Shorten said.

“Labor has always been the friend of small business.

“The good news is that people in small and medium business enterprises can vote Labor or Liberal,” he told a press conference in Melbourne on Friday morning.

“But if they vote Labor they’ll be getting the same tax reductions as they would if they voted Liberal.”

In a statement, the Labor leader and his shadow treasurer said: “With a Shorten Labor government, 99 per cent of businesses will receive a tax cut, no business will have their tax rate increased, and all businesses will be able to plan and invest with confidence and certainty.

The tax rate cut of 26 per cent for the companies affected would begin in 2020/21, then drop to 25 per cent the following year, under the legislation to be introduced to Parliament next week.

The opposition says it will pay for the cuts by delaying the introduction of its proposed Australian Investment Guarantee by 12 months.

The Australian Investment Guarantee would give all businesses in Australia the ability to immediately deduct 20 per cent of any new eligible asset worth more than $20,000, with the balance depreciated in line with normal depreciation schedules from the first year.

Assets such as tangible machinery, plant and equipment such as trucks and utes and intangible investments (such as patents and copyrights) would be eligible for the immediate deduction.

Meanwhile, Mr Morrison said family businesses know the Coalition has got their back, as it has brought forward plans to cut their taxes.

“The top end of town might have their disagreements with us from time to time, but what we do is we back small and family businesses, medium sized businesses,” he told ABC TV on Friday.

“They are the businesses all across Australia, and what we’re doing for those businesses is getting their taxes down and we’re going to get their electricity prices down.”

-with AAP