Opinion polls suggest that the country's first woman Prime Minister Julia Gillard is neck-and-neck with conservative challenger Tony Abbott.
14m Australians will cast votes in a mandatory ballot.
Opinion polls show an even 50-50% vote share for Gillard's Labor Party and the Liberal/National coalition headed by Abbott, the prospect of the first hung parliament since 1940 is high.
Gillard's centre-left Labor has struggled to reassure voters after June's shock ousting of elected prime minister Kevin Rudd, raising Abbott's hopes of a surprise victory.
Julia Gillard, 48, a red-headed former lawyer who was born in Wales, has pledged improved education and healthcare and played up Labor's economic record, as well as popular plans for a national broadband network.
Tony Abbott, a 52-year-old climate change sceptic and religious conservative, has targeted fears over illegal immigration and questioned Labor's spending record, as well as its knifing of Rudd.
The right-leaning coalition needs a swing of 2.3% to return to power less than three years after Rudd ousted 11-year prime minister John Howard, pledging action on climate change and the impoverished Aboriginal minority.
Victory for Abbott would make Labor the first one-term government since 1932, when the party's James Scullin lost power during turmoil caused by the Great Depression.
Both sides are targeting a swathe of marginal seats in resource-rich Queensland (Kevin Rudd's home state) and western Sydney, where rapid population growth has put pressure on services and raised concerns about immigration.
As campaigning closed, Abbott looked to prove his credentials as a vigorous go-getter with a 36-hour push, touring Sydney through the night, visiting a police station and a flower market.
Most polls close at 600pm Sydney time with the remainder two hours later due to time differences.
A record 1.8 m people or 12.5% of the electorate have cast their ballot in early voting.
The elections will decide the make-up of the 150-seat lower house and half the 76-seat Senate.
