In small bowl, stir in 1/3 cup (75 mL) water with 1 tsp (5 mL) of the sugar and yeast. Let sit for 5 to 10 min., or until foamy. In large bowl, whisk together the flour and salt. Set aside both bowls.
In another large bowl, whisk milk, eggs and melted butter. Then stir in the rest of the ½ cup (125 mL) sugar and yeast mixture. Gradually stir in flour mixture to make a soft dough. Turn out onto a lightly floured surface and knead 8 to 10 min., adding more flour as needed, until dough is smooth and elastic and no longer sticky.
Place dough in large greased bowl, turning dough over to grease all sides. Cover and set in warm, draft-free place for 1 to 1½ hr., or until doubled in volume.
Punch down dough. On floured surface, roll dough out to ½-in. (1-cm) thickness. Using a 3-in. (8-cm) round cutter, cut out 12 rounds. Gather scraps and re-roll dough one time only for additional cuts. Use a 1-in. round cutter (2.5-cm) to cut out holes.
Transfer donuts and holes to floured baking sheet. Cover and let rise 1 hr., or until doubled in size.
In deep fryer, wok or deep saucepan, heat 2 in. (5 cm) oil until fryer thermometer reads 350°F (180°C). Fry 3 donuts (or 6 holes) at a time, turning once, until golden and puffed, about 4 min. With slotted spoon, transfer to paper towel-lined tray or board. In large bowl, mix sugar with cinnamon. While still warm, roll donuts and holes in cinnamon-sugar to coat. Add additional sugar and cinnamon, as needed.
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