Chapman, from Newcastle, is known for her work on films such as The Babadook and Lantana and is very much still living.
When paying tribute to people within the film industry who have passed away over the last year, the Academy referenced fellow Australian Janet Patterson, an Oscar-nominated costume designer from Sydney who passed away on October 21 last year in Darlinghurst, Sydney.
Patterson and Chapman worked together on the 1993 film The Piano, possibly leading to the confusion when they produced a photo of the latter.
Debbie Reynolds, Carrie Fisher close the In Memoriam tribute at the #Oscars. pic.twitter.com/vVDpageplg — Hollywood Reporter (@THR) February 27, 2017
Patterson can be seen below (middle) in a photo on set during production of the film with Chapman (left).
She was nominated for four Academy Awards for Best Costume during the 66th, 69th, 70th and 82nd Oscars ceremonies for her work on the aforementioned The Piano as well as The Portrait of a Lady, Oscar and Lucinda and Bright Star.

Source: Twitter