When it comes to preferences they go to the parties/candidates in the order that you number them. Others can suggest where you send your preferences (how to vote cards being the typical method) but ultimately it’s up to you.

For the house of reps if a third party doesn’t will the seat you will ultimately end up voting for Labour or Liberals, because you have to number all the boxes. You’ll have to decide which you like more (or least) and number accordingly. In the senate you can potentially exhaust your vote before reaching the majors (assuming you reach the minimum numbering before getting to them) but unless you truly believe both majors are the same I’d advise including them.

If you vote above the line in the senate your preferences follow party lines as you have numbered them (i.e. preferences will count towards the candidates for the first party you number, then the second and so forth). You still control what parties you’re voting for and what order.