I bought a small 220v/300 watt tool from ebay that came from either china or Australia. I am worried that the 20 amp breaker on my 220v line in my shop will fry the motor. do I need a step down transformer to make it work or will it work as is?
The 20 A breaker is the maximum the circuit can provide. Your motor is rated 300 W so it should use less than 2A and be fine. The concerns are frequency - 50 vs. 60 hz can affect the speed, and by extension safety and efficiency, of the motor, depending on design. In addition any used or "unknown" device, particularly if not rated /tested by a reputable source, might turn out to be a safety hazard even under normal use due to issues with insulation, grounding, or other problems.
As far as the voltage goes, you're OK to hook up that tool to a 220 volt circuit. However, if the tool has a motor that is designed for a 50 hz system, it may not work or it may run poorly and overheat. That could be a fire hazard.