The 42 year-old woman, who has not been named, is believed to have been struck by a 60cm piece of steel pipe, in what witnesses described as a “freak accident”.
Workplace safety officials have launched an investigation into the accident, which occurred on Wednesday morning in the north Queensland town of Townsville.
The Daily Telegraph reports that the woman was decapitated and died instantly at the scene after walking past an empty block of land just after 8am.
Police said a tractor pulling a grass cutter ran over a steel pipe that had been lying in the long grass, which was then sent flying through the air at great speed.
Initial reports suggested she had been hit by a lawnmower blade due to the horrific nature of her injuries.
Police are investigating whether it was a blade that struck her.
The male tractor driver, an unnamed 48 year-old private contractor, is in hospital suffering shock.