In a policy document outlining its plans for housing affordability, Labor said ignoring the recommendation by the Financial System Inquiry “would leave the budget more exposed over time”.

“Borrowing by superannuation funds implicitly transfers some of the downside risk to taxpayers, who underwrite adverse outcomes in the superannuation system through the provision of the age pension,” Labor stated at the time.

Speaking to SMSF Adviser, Hewison Private Wealth director Chris Morcom said there hasn’t been much detail released about this proposal since it was announced and with the election only weeks away, it is impacting the ability of SMSF clients to make long-term investment decisions.

If Labor does win the election, Mr Morcom said, it is unclear what the requirements would be with this measure in terms of whether SMSFs will need to unwind their limited recourse borrowing arrangements (LRBAs) or whether all existing arrangements would be grandfathered.

“One of the issues I have [with the policy], is that if you go off and make a significant investment decision such as to buy a property for your business premises, its not something you do for the short-term. Generally, those financing arrangements are for a fairly significant time-frame,” said Mr Morcom.

“If there’s going to be no grandfathering of those arrangements then that could be a real problem.”

While Mr Morcom said SMSFs who were already planning to enter an LRBA in the short-term should to do so sooner rather than later, he also warned against making significant changes to strategies purely on the basis that a proposed policy may become law.

“We’ve seen enough times where the government of the day hasn’t been able to get proposed policies let alone the opposition, so I think there's a fair bit of water to go under the bridge before we can have some certainty around these measures,” he said.

“History is littered with policy proposals that never actually got legislated.”