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Preheat oven to 180 C (350 F) standard / 160 C (320 F) fan-forced. Grease and line an 8-inch round cake pan with baking or parchment paper.
In a large mixing bowl, add flour, baking powder, sugar and salt. In a separate bowl, add oil, vanilla and egg. Beat briefly with fork just to break up the egg yolk.
Add to dry ingredients along with the sour cream and stir to combine. The cake batter will be very thick – this is ok.
Transfer cake batter to your cake pan and gently smooth the top. Bake cake for approximately 35-40 minutes or until a skewer inserted in the middle comes out clean.
Leave cake to cool slightly before carefully removing from cake pan and leaving on a wire rack to cool completely.
To make the frosting, add butter to a large mixing bowl. Beat with an electric mixer on medium speed for 2 minutes or until smooth and creamy. Add vanilla and sugar and beat slowly until it starts to come together. Add sour cream and continue to beat until smooth.
Cover top of cake with sour cream frosting and serve.