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Hi Danny,
If you want to be found in Australia, you need a .com.au OR a .com hosted in Aus. Either of these will be fine.
However, it may be there is some hidden algo that gives a little bit of extra weight to .com.au sites that are also hosted in Australia. Remember, there are over 100 factors going into Google's algo, probably a lot more. I have no proof of this theory whatsoever.
But...
What happens if you want to be found in google.com.au (AU site only) AND google.co.nz (NZ sites only)?
You would think registering a .com.au site and hosting it in New Zealand would give you the best of both worlds?
We found this is not the case - a .com.au hosted in New Zealand is considered an Australian site ONLY.
I think it's perfectly acceptable to host Aus sites in the USA, so long as the customer understands it won't be as quick as an Aussie host. Your prices will probably reflect this.
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