Prime Minister Scott Morrison will move to fast-track tax cuts for small businesses within weeks, promising to deliver relief to almost 350,000 firms in WA five years earlier than planned.

In a bid to widen the policy difference with Labor, Mr Morrison will today commit to new legislation that would bring forward the tax cuts for businesses with turnovers up to $50 million.

Describing the new time line as a “major test” for Opposition Leader Bill Shorten, Mr Morrison said that it meant millions of small and medium-sized businesses would pay less tax, sooner. “This builds on the first stage of company tax relief that our Government delivered in May 2017, because we believe in a fair go for those who have a go,” Mr Morrison said.

“This will mean more investment, more jobs and higher wages.”

Under current legislation, the company tax rate for businesses with turnovers below $50 million has been reduced from 30 per cent to 27.5 per cent.

It was scheduled to fall to 25 per cent in 2026-27. That cut would be fast-tracked by five years under Mr Morrison’s plan, meaning those businesses would pay a tax rate of 25 per cent in 2021-22. The timing changes would also apply to the rollout of the 16 per cent tax discount for unincorporated businesses.

To be introduced in the next session of Parliament that begins on Monday, the promise will cost $3.2 billion over the Budget’s forward estimates and cements small business policy as a Federal election battleground.

Labor supports the small and medium business tax rate of 27.5 per cent but opposes it falling further.

If the legislation gets through the Senate before next year’s poll, Mr Shorten would be confronted with a legislated rate fall on July 1 if elected.

“This legislation that delivers this additional tax relief will be a major test for Bill Shorten — does he support Australian businesses, Australian workers and Australian jobs,” Mr Morrison said.

“Or is Bill Shorten’s only plan for the economy to introduce an extra $200 billion in taxes?”

Government figures suggest the tax changes would mean an independent supermarket or pub that made $500,000 profit would have an additional $7500 in 2020-21 and $12,500 in 2021-22 to invest in their business or staff, or help manage cashflow.

In WA, 87,500 companies with turnovers of $50 million or less would benefit, as would 262,000 unincorporated businesses with turnovers below $5 million.

Those businesses combined employ about 700,000 workers in the State, according to the figures. The Government’s latest move comes after it abandoned its tax cuts for bigger businesses because they were rejected by the Upper House.