It is quite possible this burial etc. is your Margaret despite the incorrect parents’ names. The informant at the time of death may have been confused about the question or simply did not really know who her parents were.
I would be settling the doubt by purchasing a transcription of the certificate of marriage of Alexander BINNING and Margaret MCDONALD. On this she would be providing the information herself and if it is correctly completed her parents’ names and great deal of other information will be shown.
As previously given-
Reg 1306 In 1860 BINNING Alexander
to MACDONALD Margaret
at BATHURST
http://www.bdm.nsw.gov.au/bdm_fh.html#transcriptionHere is a link to what you may find on
Australian certificates-
http://www.jaunay.com/bdm.htmlThe couple had a son and, as a long shot,

the initial of his second forename may be of interest.
Birth
Reg 1969 In 1870 BINNING JAMES
Parents Alexander & Margaret at SYDNEY
Death
Reg 8776 In 1895 BINNING James
S Parents Alexander & Margaret at KATOOMBA
Sue
ADDING
Someone with rich resources for NSW may be able to track this man and reveal his second given name.