Bana, who is competing with co-driver Tony Ramunno, crashed the 1974 Ford XB GT Coupe into a bank southwest of Sheffield in central Tasmania.
The star of Chopper, Troy, and Munich has owned the car for 23 years and had just completed a major two-year restoration.
Both men escaped the crash unscathed, and the car is expected to be back in action tomorrow.
The crash happened just over 25km into today's 37.75km stage, which is regarded as one of the most difficult of the rally.
Drivers aim to complete the stage in 17 minutes.
A Targa Tasmania spokesman said it was not known what caused the crash.
He said the road was dry at the time.
"The car is out of the stage and back in Burnie," he said.
"The front righthand side fender was damaged, but they will be restarting tomorrow.
"It's a very testing stage."
Bana first drove in the Targa Tasmania in 1996.
He was in 53rd place today, in a field of 115 cars in the Outright Classic competition, before the crash.
The next 137km stage starts in Burnie and winds down the west coast before finishing in Hobart.
Speaking before the event, Bana said he was looking forward to competing in the rally.
"The car has been a labour of love, really," Bana said.
"Targa Tasmania is a fantastic showcase of classic cars, and I reckon our XB GT Coupe should bring back a lot of good memories for many of the fans watching the rally as it makes its way around Tasmania."
