Why was land from New South Wales transferred for the Australian Capital Territory?

Land from New South Wales was transferred to create the Australian Capital Territory because the Australian Constitution mandated that the nation’s seat of government be located in a dedicated federal territory.12

Specifically, Section 125 of the constitution required that this federal territory be situated within New South Wales, but at least 100 miles (160 km) away from Sydney. Following these requirements, the Canberra-Yass district was selected in 1908 as the site for the new capital. The federal government began acquiring this land in 1911 to ensure the capital would remain under federal ownership and control, separate from the jurisdiction of any individual state.2