There is lots of talk about preferences in the upcoming election and as usual lots of confusion, so I want to clear up a few points.

1. Only you decide your preferences

Lots of people are worried about where their preferences are going, which is reasonable given some of the confusing coverage of the issue, but there is no need to be concerned. Only the voter decides their preferences – at least when it comes to which parties your vote goes to. This has always been the case in the lower house (i.e. where you vote for your local electorate), but only changed last election for the Senate.
There is lots of talk of things like “Liberals preferencing Clive Palmer”, “Greens preferencing Labor” but this is typically referring to recommendations on how to vote cards. The parties do not control your preferences, they just have recommendations on how to vote cards which only count if you copy them onto your ballot. Sometimes it is also just referring to the usual choices, e.g. most Green voters choose to preference Labor above the Liberals because they are more in agreement with their policies, so people might say “Labor will likely win seat X on Green preferences”, but it isn’t the Greens parties giving the preferences, it is the choice of the voters.

2. You don’t have to vote below the line to control your preferences*

It used to be that if you voted above the line in the Senate then your preferences were determined by a Group Voting Ticket (GVT) lodged by the party. The system has changed, you can still vote above or below the line but if you vote above then you have to choose your own preferences for parties, and if below then you choose candidates. Lots of people seem to not understand this and still say that you need to vote below the line, but for probably most people, above the line is a perfectly sensible option, and in particular if you’re not really sure of yourself, it is less likely to be informal since it is easier.
There are good reasons for voting below the line for some people though – if you want to vote for an ungrouped independent, if you want to vary the order in a party list or if you want to vote across party lines. If none of that means anything then you’re probably best going above the line.
The * in the heading is because its truth depends on your interpretation, I was thinking along the lines of the GVTs, but some still consider voting above the line to be giving up control because when voting for a party they determine the order of their candidates in your vote. It is right there on the ballot in front of you though, so it’s not secret, and I think that lots of people are not familiar with Senate candidates and would not be concerned about this.

3. You can and should number lots of preferences in the senate.

The instructions say you should vote for at least 6 parties above the line or at least 12 below the line. Some people (including electoral officials according to some reports) have been omitting “at least” and even saying “no more than”. The choice of 6 and 12 is quite arbitrary (the fact that there are 6 vacancies is not particularly relevant in fact), it is possible that nothing other than your number 1 is used, or it is possible that you could number 50 below the line and your number 50 would be used. If you don’t number enough then your vote can exhaust and not be fully counted. Numbering as many as you sensibly can (i.e. when you put a number next to a party or candidate you know that you would prefer them to everyone with a larger number or without a number). I wrote much more on this last election and it’s all still relevant except that one elected 12 rather than 6 senators to each state – http://www.frogworth.com/stuart/blog/?p=2088#more-2088

4. How to vote cards aren’t about controlling your preferences

There’s an idea that parties hand out how to votes as some sort of nefarious plot to control your preferences. Actually there is a very simple reason why they hand out how to vote cards – to get you to vote 1 for them. The fact is, lots of people go to polling places undecided or unsure of how voting works. Parties hand out how to votes in the hope that these people will vote for them. In particular, as soon as one person is doing it there is a strong incentive for everyone else since people may just choose from the options presented to them on cards.
So why do they have preferences on them? A formal vote in the lower house has all boxes numbered and it is no good getting someone to vote 1 for you if they put in an informal ballot, so the cards show a formal vote. This means you have to decided on an order for all the candidates.
Sometimes people use a how to vote which does not show all preferences, instead it asks voters to choose their own, in principle this is nice but in practice carries a strong risk that some will vote informally.

5. Ignore lower house preference scares

What I mean by this is when someone picks out a lower preference on a how to vote (HTV) card and says – hey look, party X is preferencing party Y! It’s an attempt at guilt by association.
Now this isn’t to say that no preference recommendations aren’t important. In the lower house the relative positions of candidates likely to be the last two in the count (usually the two major parties) can be important, and in the Senate preference recommendations, where parties typically only give the minimal 6, are important. Of course in both cases they are important because a certain percentage of people follow them, for you as an individual voter they need not be important since you can decide for yourself what to write on your ballot.
But in the lower house a HTV usually shows a preference for every single candidate, for reasons outlined above. In particular you will have a ranking for a bunch of candidates who you disagree with on various issues. Picking out one from lower on the list and claiming that this means you support them or agree with them, or simply “are preferencing them” (taking advantage of people still thinking of the GVT days when a party may send their vote somewhere they don’t really want) is usually a silly scare tactic.
A related one is “will you put party Z last”. There maybe a number of candidates you strongly disagree with and only one can be put last, so that immediately brings accusations because you didn’t put the other last.