13 Prorogation of Parliament and Dissolution of the House of Representatives
The federal electoral cycle in Australia is determined by provisions in the Constitution and the Commonwealth Electoral Act 1918. The House of Representatives can only meet for three years from the opening of the Parliament before its members must face re-election. According to the Constitution (section 28), the Governor-General can bring the House of Representatives to an end before that time, on the advice of the Prime Minister, by dissolving the House. The Senate is not dissolved, except in the special case of a 'double dissolution' election under section 57 of the Constitution.
Before dissolving the House of Representatives, the Governor-General issues a proclamation proroguing the Parliament. Prorogation is an ancient power of the British Crown adopted in the Australian Parliament as the means of bringing a session of Parliament to a close. A prorogation may take place separately from an election, but this rarely happens now except for ceremonial purposes. For example, in 1974 and 1977 the Parliament was prorogued when the Queen visited Australia which enabled Her Majesty to attend and open Parliament.
When an election is called, the Prime Minister usually announces a dissolution and prorogation of Parliament at the same time before they are formalised by the Secretary to the Governor-General in a public ceremony in front of Parliament House.
After the Parliament is prorogued and the House of Representatives dissolved, bills and other business before the House of Representatives and the Senate lapse and will need to be reintroduced. The government becomes a caretaker government and, by convention, does not make major decisions. The sittings of the Senate are terminated, but Senate Committees may still operate.
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Parliamentary Handbook - Chronology of Parliaments
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22handbook%2Fnewhandbook%2F2008-12-19%2F0071%22
More information
Australian Electoral Commission - Federal Election Timetable
http://www.aec.gov.au/Elections/australian_electoral_system/Electoral_Procedures/Federal_Election_Timetable.htm