The 25-year-old man turned on to the tracks on Wednesday night and became stuck trying to reverse, police say.
He managed to get out of the car before it was hit by the train which pushed the wreckage 15m along the tracks, causing lengthy commuter delays.
None of the 13 passengers on the train was injured.
A local resident told ABC News that it was not the first time such an incident had happened.
"His GPS has turned him left onto the railway lines," the resident said of the latest mishap. "It looks a lot like a road at night."
Australia has seen a number of GPS errors.
In 2012, police in the town of Mildura were reported to have warned motorists not to rely on satnavs to find the town because several people had instead navigated themselves into a remote national park.
March 2015: A group of Belgian tourists are sent on a detour of close to 1,200km (750 miles) after a GPS navigation error by their bus driver saw them arrive at La Plagne in the Pyrenees rather than  La Plagne in the Tarentaise Valley
June 2013:  A woman follows her GPS right into the path of an oncoming train in Belmont, US
January 2013: A woman leaves her home in Belgium intending to pick up a friend in Brussels, 144km (90 miles) away. After switching on her GPS, she ends up in Zagreb, Croatia.
March 2012: Japanese tourists drive a rental car into the Pacific Ocean as as they follow GPS instructions down a road toward Australia's North Stradbroke Island
May 2008: A group of travellers nearly plunge off a cliff to their deaths because of a GPS error as they were making a scenic drive from Bryce Canyon, in the US state of Utah, to the Grand Canyon in Arizona
October 2006:  A man using his GPS to direct him on a trip from New York to Pennsylvania instead crosses the border into Canada
A Melbourne driver who followed satnav directions onto a set of railway tracks narrowly escaped with his life after his car was hit by a train.