Nobody was seriously injured in the 10.20am crash which a witness said happened while the crossing's warning bells were sounding.
"I was watching because I could hear the horn on the [approaching] train for ages," the eyewitness said.
"All the crossing bells and flashing lights were working normally."
A Fire and Emergency New Zealand spokesman said two crews responded to the crash in High St and one person had to be extricated from the damaged car.
Emergency services personnel at the scene said the SUV was travelling with a large minibus type van.
Both vehicles were driven and occupied by a group of tourists
The witness said the van appeared to have crossed the lines first.
"There was a thump and I watched [the vehicle] spinning through the air," he said.
Traffic was moving carefully in both directions as police took statements from witnesses and the shaken looking tourist group.
A Hato Hone St John spokesman said two ambulances attended and three patients, all in minor conditions, were transported to Balclutha Medical Centre.
KiwiRail chief operations officer Paul Ashton said the train was travelling from Dunedin to Edendale to pick up wagons.
The lights and bells were working at the time of the crash, he said.
