The pilot's body has been retrieved from the two-seater aircraft, which sank in about six metres of water, 50 metres from the shore at North Curl Curl.

A 32-year-old male passenger was helped to shore and has been treated for spinal injuries.

Local resident Bruce Giffin was sitting in his car in the Curl Curl beach car park when he saw the plane was heading from north to south.

"You could see it was losing altitude, it was going very slow," he said.

"I'm pretty sure from a distance it looked like the propeller had actually stopped, so pretty much from North Dee Why heading into Curl Curl it was gliding.

"He got to probably mid Curl Curl beach losing altitude and decided, I'm not too sure why, to do a 180-degree turn.

"Probably thought he couldn't land on Curl Curl Beach, running out of room and didn't make it. Went straight into the water at North Curl Curl.

"He was heading into the wind. That would have been his best bet to get elevation. I'm not quite sure why he didn't try and land at South Curl Curl beach, possibly thought he was going to run out of beach and maybe end up in houses, so he turned.

"But it was probably a fatal error because once he turned and went with the wind he lost altitude and hit the water."

Mr Giffin said the plane then sank quickly in shallow water and he saw a man swimming out of the wreckage, before locals assisted him.

"He probably freed himself; it's not very deep there.

"He had bad back injuries, it did take him some time before he was able to tell anyone there was someone else in the aeroplane.

"People had gone in the water in their clothes and in their undies."

Mr Giffin said he immediately dialled triple-0 when he saw the crash.

"It was quite surreal; you had to kind of look twice."

The air traffic control website, LiveATC.net, recorded the mayday call as follows:

Light plane: "Mayday, mayday mayday, Light wing 5040. Engine failure just north of er ... north ... we're going to try a beach landing.

ATC: "Station calling Sydney radar say again?

(no reply for several seconds)

ATC: "Station calling Sydney radar for the forced landing say again."

Light plane: "Light wing 5040 we have a er, engine failure."

Nothing more. Sydney radar asks another pilot if he sees or hears anything to let her know.

Rescuing the survivor

A witness who gave his name only as Travis, said he had helped rescue the survivor but believed the pilot remained trapped underwater.

"Me and another guy ... we ran out, swam out, we pulled one guy out, the passenger," Travis told Macquarie Radio.

"But mate ... we couldn't get back out there. There's still a guy down at the bottom, in the plane.

"We got to the aircraft but [the passenger] had already popped out, he was sort of floating.

"He couldn't swim, he'd hurt his back pretty bad so we paddled him over to the shore."

Travis said the survivor was able to move his feet and legs.

The Ambulance Service of NSW said the survivor was treated on the shore for suspected spinal injuries, before being winched off the rocks and taken to Royal North Shore Hospital.

Cliff Curll, who lives on the headland above the crash site, said he saw the man being treated on the rocks.

"The plane is underwater ... there's a chopper looking around the water and police boats are out there."

Constable Jacob Gow and Chief Inspector Colin Green were first on the scene.

After helping rescue the passenger they swam out to search for the pilot.

"Jacob and I ... very quickly, without even thinking, got partially undressed and then swam out to the plane," Chief Inspector Green told reporters at the scene.

"There was a person in the plane but due to the depth of the water and not having any diving equipment, we weren’t able to access inside the plane."

The pilot:

David Rittie, the president of the NSW Sport Aircraft Club, said the pilot had been flying for about six years.

Mr Rittie said he did not want to release the man's name until his family had been told.

He said he believed the plane was a Lightwing Speed, with a Rotax 912 engine.

The rescue helicopter spokesman said the aircraft sent a mayday alert before crashing about 10.15am.

It disappeared off the radar shortly afterwards.

The Australian Transport Safety Bureau said it was aware of the accident.

- with AAP