Australia’s Sole Traders Missing Out On Up To $608 Million In Road-Related Tax Deductions

Australian sole traders who drive for work could collectively be leaving up to $608 million in road-related tax deductions unclaimed, according to modelling from accounting software provider Rounded.

The Melbourne-based company, which builds accounting and business software for sole traders, estimates that each eligible sole trader driving a modest 4,000 kilometres a year for work could be missing out on $1,126 at tax time – more than double what those same kilometres cost in fuel.

Rounded has launched a new app called Trax, designed to automate the process of tracking work-related driving so that sole traders can claim the Australian Tax Office’s 88-cent-per-kilometre deduction without any manual input.

The size of the gap

The ATO allows sole traders to claim 88 cents for every kilometre driven for work, up to 5,000 kilometres per year. No receipts are required. The only obligation is to maintain a record of trips taken.

A sole trader earning between $45,001 and $135,000 a year and driving 4,000 work-related kilometres annually is entitled to a $3,520 deduction, which translates to $1,126 back at tax time at a 32 per cent effective marginal rate.

For context, those same 4,000 kilometres cost approximately $508 in fuel based on average consumption of 8 litres per 100 kilometres at Melbourne’s current average petrol price of 158.9 cents per litre.

Rounded’s modelling estimates there are roughly 900,000 mobile sole traders in Australia, drawn from a broader population of 1.5 million sole traders. The 900,000 figure is based on Rounded’s estimate that 60 per cent of sole traders work in mobile, service-based industries including trades, construction, healthcare, professional services, delivery and real estate.

Depending on the proportion of those sole traders who fail to claim, the collective value of unclaimed deductions ranges from $253 million at the conservative end to $608 million at the upper bound. ABS data for June 2025 records 822,873 registered sole proprietors, with the wider population including contractors and non-GST-registered operators exceeding 1.5 million.

How Trax works

The Trax app connects to a vehicle via Bluetooth or CarPlay and begins tracking automatically when the driver gets in the car. It captures the date, time, distance and full GPS route of every trip without requiring the driver to open the app, press a button or remember to start or stop recording.

Setup takes roughly 30 seconds, according to the company. At the end of the financial year, the app produces an ATO-compliant PDF or spreadsheet containing trip records that can be handed to an accountant or attached to a tax return.

The app supports both the cents-per-kilometre and logbook methods and surfaces whichever provides the higher deduction at tax time. For sole traders already using Rounded’s accounting platform, tracked kilometres flow into the system in real time and update the running tax deduction as each trip is completed.

“Fuel prices can really hit people who drive for a living hard,” Oliver Garside, Co-Founder of Rounded, told journalists. “What Trax does is make sure that pain is at least partially offset at tax time, and that the kilometres you drove this week aren’t just a cost, but a claim. We built what our customers asked for. They drive. Trax does the rest.”

Why existing tools fall short

Grant McCall, Co-Founder of Rounded, argued that existing mileage tracking tools have failed to stick because they require too much from the driver.

“Every existing solution in this space asks the driver to do something: install hardware, open an app or remember to start or stop a trip,” McCall explained. “We spent a long time watching people try those tools and give up because tracking was inaccurate and the data couldn’t be trusted.”

McCall added that Trax was designed around passive operation.

“Trax asks the driver to do nothing. It uses your car’s Bluetooth or CarPlay connection to know when you’re driving, logs the full GPS route automatically, and produces an ATO-compliant logbook without a single tap,” he continued. “After ten years of making tax simple for sole traders, we know how important trust and ease of use are when it comes to accounting, which are the two pillars Trax is built on.”

Availability

Trax is available on iOS through the App Store, with Android support in development. Data is stored on-device and synced to an Australian AWS region with end-to-end encryption. Full features and pricing are listed at trax.rounded.com.au.

Rounded was founded in 2015 and provides invoicing, expense tracking, BAS lodgement and EOFY tax tools for sole traders. The platform has processed more than 2 million invoices totalling $2.4 billion.

Last Updated on June 28, 2026 by Nick Ross