The world number two plans to take February off to recover from a nagging shoulder injury, but will compete at Melbourne Park in search of an 11th Grand Slam title.
Nadal, 25, said his semi-final loss to Gael Monfils at the Qatar Open to start 2012 was a better result than he had expected.
"It was a better result than I thought and the shoulder is in perfect condition," Nadal said.
"Normally, you warm up for half an hour, 40 minutes, but there I was warming up for maybe an hour and a half on match days to practice a little bit more."
While he won a sixth French Open crown last year, Nadal lost to world number one Novak Djokovic in the finals of Wimbledon and the US Open.
Nadal said towards the end of last year he had lost some passion for the game, but he did lead Spain to the Davis Cup title at the start of December.
The 2009 Australian Open champion said he was working hard to regain his world number one ranking.
"I played with fantastic passion the last two matches of the year in Davis Cup," Nadal said.
"I've been working hard. I think I'm working the right way. There's Djokovic (to compete with), but there's a lot of fantastic players around and I have to be ready to compete against everybody.
"Last year I lost six important finals against him, but I played finals and that's something really difficult to do. I know how difficult it is to be (in finals) almost all the time."
The draw for the Australian Open will be made on Friday.