In this example I would say the sub domain. The main question here would be is if this a translation of the site, or is it a completely different website? Seeing how it's Australian/American I am assuming it's not a translation but rather a different site that serves a different function.
Search engines see sub domains as different sites, but like a child of the main site. Sub folders are generally considered a sub part of the main site, rather than a separate site. I would recommend the sub domain route for a couple different reasons:
(1) You could use an Australian host to host the sub domain and keep it more local.
(2) If you're submitting to a lot of local Australian directories or catalogs, it won't clash with your root level link building campaign(s) other wise cause confusion.
Again, the flip side is if you're just making a slight variation - for example a store that charges in AUD instead of USD, or different model numbers but the same product, then your best bet would be to do it in a sub folder rather than a sub domain, autoredirect based on Geo location and perhaps block the folder via robots.txt so your Australian content isn't considered duplicate content.
Hope that helps.