The Australian Transport Safety Bureau on Friday released an update on its investigation into the 2017 New Year's Eve Sydney Seaplanes crash that killed all six people on board.

The DHC-2 Beaver, piloted by Canadian Gareth Morgan, crashed at Jerusalem Bay in the Hawkesbury River on December 31, with high-profile British businessman Richard Cousins and his family on board.

Carbon monoxide toxicology testing undertaken found the pilot and two of the passengers had elevated levels of the gas in their blood, the ATSB says.

"The ATSB considers the levels of carbon monoxide were likely to have adversely affected the pilot's ability to control the aircraft," ATSB Chief Commissioner Greg Hood said in a statement on Friday.

The ATSB considers it likely Mr Morgan and the passengers were exposed to the gas inside the aircraft cabin.

Investigators found pre-existing cracking of the seaplane's engine collector-ring, which could lead to exhaust leakage, and a breach in the plane's firewall, which can allow gases from the engine bay to enter the cabin.

The discovery has led the ATSB to issue safety advisory notices to the industry focusing on the prevention and detection of carbon monoxide in piston-engine aircraft.

The bureau released its preliminary report into the fatal crash in January 2018, which found no evidence of problems with the DHC-2 Beaver.

Investigators instead turned their attention to Mr Morgan's actions moments before the crash.

The expected flight path should have seen Mr Morgan taxi away from Cottage Point, take off and turn east to gain altitude over the Hawkesbury River.

Instead, he turned northwest and, flying below the height of the mountainous terrain, entered Jerusalem Bay and made a sharp right-hand turn before the plane dropped nose-down into the water.

The ATSB's final report into the crash is due to be released in the coming months.

Australian Associated Press