Whereas a properly cited quotation has three elements, a properly cited paraphrase has only two: the author's last name and the year of publication. No page number is required, although it isn't incorrect to include one. (See example below)

Paraphrasing is translating another person's ideas into your own words in a passage of roughly the same length as the original. (Note that this differs from summary, which is condensing long passages into short ones.) Paraphrasing is kind of a middle-ground between directly quoted material and your original thoughts. Like quotations, paraphrases are still based on someone else's ideas and must be cited. Below are two examples of paraphrase: the first is acceptable and the second isn't.

Original Material

Exclusive, private knowledge offers deeply satisfying pleasure. To know something that others do not is a constant source of satisfaction; it gives one the feeling of being in touch with deeper things that can afford prestige and authority. You are directly in contact, you have something which others have not, and so you are important, not only to yourself, but to others [...]. You are the leader, the authority; and this position comes easily, for people want to be told, to be led. The more we are aware that we are lost and confused, the more eager we are to be guided and told; so authority is built up in the name of the State, in the name of religion, in the name of the Master or a party leader.
(Krishnamurti, J. (1967) Commentaries on living, first series, from the notebooks of J. Krishnamurti: 1 st series. IL: Quest Books. p.66

Proper (Non-Plagiarized) Paraphrase

Krishnamurti (1967) describes "private knowledge" as a source of gratification and self-satisfaction: those who have private knowledge are granted the status of expert, since they have access to knowledge that others do no have. The holders of private knowledge are likely to become leaders, not necessarily because of any intrinsic capabilities or goodness, or even because of their expert status, but because people seek leaders who have answers. We give credibility to those who seem authoritative, which accounts for the creation of nations and governments, religions, and other groups to which people are drawn, and to which they often grant control over their lives (p. 66).

The writer of this passage paraphrases the original author's words by using language of his own. When he borrows a word or phrase from the original he puts it in quotes. Note that the paraphrase is roughly the same length as the original passage. Note also that that elements of the citation are broken up, lending a fluid feeling to the passage.

Improper (Plagiarized) Paraphrase

Private knowledge is satisfying. When you know something others don't know, you are afforded prestige and authority because of that knowledge. This makes you feel important, and it makes others see you as important. In this way you become a leader, for people want to follow those who can be decisive. This is especially true when we are confused. In this way, authority is granted to powers such as the state, or religion, or a party leader.

The writer of this passage doesn't paraphrase properly. He restates the ideas from the original passage and even borrows language from the original without quoting it. He never indicates or acknowledges the source material or the original author.