An unnamed Melbourne businessman is believed to have bought the tractor and if that's the case it will return to Australia.

The internal combustion tractor made by A.H. McDonald and Company, Melbourne, and sold new in 1912 was knocked down for $US283,500 in an online sale run by Illinois auction house, Aumann.

Sandy Reith, now 78, first saw the 108-year-old McDonalds Imperial EB model internal-combustion tractor during a family visit to French Island near Victoria's Mornington Peninsula.

"It was like coming across a prehistoric animal," he said.

He was living on nearby Phillip Island at the time and bought the tractor for a "couple of hundred dollars" when he heard it had been sold to a nearby farmer who planned to wreck it to make a trailer out of its frame.

Mr Reith, who later made a career in the general aviation industry and now lives at Stonyford in Victoria's Western District, got the tractor going again with the help of the McDonalds factory in Melbourne.

He sold the tractor to passionate South Australian collector, Kevin Rohrlach, a builder from Angaston in the Barossa Valley.

Mr Reith can't remember the selling price but thinks it was around $600 or $700.

The two-cylinder, 20 horsepower McDonald Imperial came up for sale again in 2001 after Mr Rohrlach died and his family auctioned his collection during a two-day sale.

The successful buyer was Lawrie Voutier who has a major demolition and second-hand business based at Camperdown in Victoria's south west.

Mr Voutier, who appeared in the television show, Demolition Man, paid $90,000 for the tractor which he considered a cheap price at the time given the amount of restoration Mr Rohrlach had done.

He said he owned the tractor for about a year before selling it to an undisclosed buyer for an undisclosed price.

"I had a real thing for McDonald tractors. I had about 30 of them at one stage."

A. H. McDonald was Australia's first tractor manufacturer, starting production in 1908.

The first internal combustion tractors in Australia were English Ivels which arrived in 1903.

John Edgar, a tractor collector from Heywood, Victoria, had been urging Australian officials to stop the sale.

"This rare tractor is one of just two which remain in the world, it was sent out of Australia unlawfully in 2008, and hidden from all until it appeared January this year on the auction site," Mr Edgar said.

However, neither Messrs Reith or Voutier were concerned about the sale nor did they begrudge the high price the seller received.

Mr Voutier said he bought and sold tractors all the time.

Mr Reith said he was happy he had saved the tractor from demolition.

He said the tractor was a great example of Australia's engineering capabilities at the time.

"Actually I'm glad that it's being highly valued and will be looked after wherever it goes. A great advert for Aussie engineering."

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