Running your own driving instruction business means you're also running a small business's worth of paperwork. None of this is tax advice. It's a starting point for the kinds of questions worth asking a registered tax agent, not a substitute for one. Tax rules change, individual circumstances vary, and getting it wrong can be expensive. Treat this as a checklist to bring to that conversation, not a set of answers.
Common deductible expenses
Most independent instructors are running as a sole trader, at least to start with. The general principle the ATO applies is that an expense is deductible if it's directly related to earning your income. The specifics of what counts, and how much, are exactly the sort of thing to confirm with a tax agent, but broadly, instructors tend to have expenses in a few recurring categories.
Vehicle costs are usually the biggest one. If you're instructing from your own car, that can include fuel, servicing, registration, and insurance, though if the car is also used privately, you'll generally only be able to claim the business-use portion, not the whole cost. Dual-control installation and its ongoing maintenance is a vehicle cost specific to this job, and it's worth asking your tax agent exactly how that should be treated, since it may be handled differently to routine running costs.
Software and admin tools, including your booking and scheduling app and payment processing fees, are typically treated as ordinary business expenses, similar to any other sole trader's software subscriptions.
Training and licensing costs are another category worth tracking. Initial qualification costs are often treated differently to the ongoing cost of renewing your instructor authority or completing professional development, so don't assume one treatment covers both. Again, one for your tax agent to clarify based on your situation.
Advertising and marketing, from business cards to local listings to any paid promotion, generally sits alongside the expense categories any small business would claim.
Insurance, beyond what's bundled into vehicle costs, can include public liability or professional indemnity cover if you carry it separately.
None of these categories are a guarantee of what you can claim or how much. They're a starting list to work through with someone qualified to give you an answer specific to your setup.
Logbook method vs cents-per-km: the general idea
For vehicle expenses specifically, the ATO has historically offered more than one method for working out your claim. Broadly, that's a logbook method (where you track the actual business-use percentage of the vehicle over a representative period) and a simpler cents-per-kilometre method capped at a set number of kilometres per year. The two can produce quite different results depending on how much of your driving is business use, and the rules, rates, and caps for each have changed over time and are confirmed annually by the ATO.
The practical takeaway is that it's worth understanding both methods exist and asking your tax agent which one suits an instructor's driving pattern. Almost all of your time in the car is arguably business use, which can make the logbook method more favourable, but the specifics depend on your actual situation. Don't lock in a method based on a blog post; the current rates and thresholds are published by the ATO, and that's where to confirm them.
Why records matter more than you'd think
Whichever method applies to you, the thing that actually determines whether a claim holds up isn't the method itself. It's whether you kept the records to back it up. A logbook claim with no logbook, or a general sense of "most of my driving is for work," isn't going to hold up if it's ever reviewed.
This is also where the day-to-day habit of logging lessons properly pays off twice. If you're already recording each lesson as part of running your business (date, duration, student), that same habit gives you a natural, contemporaneous record of your business driving, rather than trying to reconstruct it at tax time from memory. If you haven't set that process up yet, our guide on how to become a driving instructor in Australia covers getting the basics of the business running from day one. JoeyDrive keeps lesson records in one place as you go, which happens to double as exactly the kind of dated, consistent record a tax agent will want to see if they're building a vehicle-expense claim on your behalf.
GST and BAS basics for sole traders
If you're operating as a sole trader, you generally don't need to register for GST until your turnover crosses a threshold the ATO sets. It's sat around $75,000 for sole traders for some time, but confirm the current figure rather than relying on that number, since thresholds are reviewed and this isn't the place to rely on for an exact figure.
If you are registered for GST, you'll typically need to lodge a Business Activity Statement (BAS) on a cycle the ATO assigns you, often quarterly for a smaller operation, reporting GST collected on what you charge and GST paid on business expenses. Below the threshold, registration is usually optional, and whether it's worth doing voluntarily (for example, to claim GST credits on bigger equipment purchases) is a conversation for your tax agent, not a default answer.
Keeping pricing decisions separate from tax questions matters here too. If you're still working out what to charge for lessons as a new instructor, get clear on whether your rates need to be GST-inclusive before you lock them in, so you're not absorbing GST out of a price you'd already quoted.
Structuring your business: not a blog-post decision
Some instructors eventually consider moving from a sole trader setup to a company structure, usually once income or risk exposure grows. Whether that makes sense, and when, depends on your income, growth plans, and liability exposure, and it has real, ongoing compliance costs attached to it. This is a one-on-one conversation with an accountant, not something to decide based on general guidance online. If it's on your mind, that's reason enough to put the question to a tax agent directly rather than trying to self-assess it from first principles.
The practical starting point
If there's one thing worth doing regardless of which deductions or structure end up applying to you, it's building the habit of keeping clean, dated records from day one, of your driving, your expenses, and your income. Good records don't just make tax time faster; they're what actually determines whether a deduction you're entitled to can be substantiated if it's ever questioned. Everything else, including which method, which threshold, and which structure, is worth a proper conversation with a registered tax agent who can look at your specific numbers.