According to Traffic Services Commander of the NSW Police, Assistant Commissioner John Hartley:

Under Rule 300 of the Australian Road Rules, which prohibits the use of a hand held device while driving, if the unit is a mobile phone then any function connected to the phone would be classified as use and this includes GPS.

Rule 299, of the Australian Road Rules permits a GPS but not one connected to a mobile phone. A smart phone is still a mobile phone regardless of what else it may be capable of.

That means that even if you buy TomTom’s iPhone bracket and stick your iPhone in it to use the device as a satnav, because the iPhone’s still a phone, using it is against the law. The same rule goes for any Nokia device offering turn-by-turn navigation, any Telstra phone with WhereIs. If your satnav has a SIM card or mobile phone capability, then you run the risk of being fined.

[I]n NSW you’re looking at a $253 fine and three demerit points. The penalty in other states might be different, but the law is the same across the country.

Urrk. Watch out for that before you drop a hundie on the TomTom app for the iPhone.