Hospitals and their staff could be hit hard by planned changes to the fringe benefits tax, with reports the health sector could lose up to $200 million in the fallout.

Victorian Health Minister David Davis has told the Standing Council on Health that planned reforms will unleash a financial challenge that will intensify as salary-linked leases expire. Mr Davis has argued that with salary sacrificing now common for nurses, doctors and health officials in the public system, the second-biggest user of vehicle leases could be the hardest hit.

Shares in a major salary packaging firm have fallen as businesses attempt to foretell the costs of adjustments to the fringe benefits tax (FBT). Reports say NSW and Queensland have privately expressed similar concerns about the potential damage to the health and not-for-profit sectors. The Victorian Government says the changes could impose an additional burden on hospitals and an additional tax on hospital employees when they take out new leases. Health services may be forced to work out who should pay for FBT fallout and how to fund extra cars if staff opt against leasing work vehicles as part of salary packaging.

If the proposed legislation is passed, the FBT concessions will only be available for cars used for business reasons and must be backed up by log book records.