When a canister used for final disposal of spent nuclear fuel is in the deposition hole of deep geological repository, the loading case which would most impact the structure integrity of the canister is to postulate an earthquake induced rock shear through a deposition hole. This paper evaluates the acceptable sizes of defects in the cast iron insert of canister using fracture mechanics analysis. The submodelling technique of finite element analysis was employed to calculate the fracture behavior of the canister with postulated defects subjected to shear loads due to earthquake. At first, the stresses of the global model and the uncracked submodel were compared to check the correctness of the transferred displacements from the global model to the submodel. Then, surface and internal flaws with various shapes and depths were modeled individually in the submodel. A 5 cm shear displacement was applied on buffer and then transmitted to the canister. The calculations of J-integral of each flaw indicate that the surface semi-elliptical defect is more critical and the density of buffer material significantly affects the acceptable size of postulated defects. Present results can provide acceptance criteria of crack detection for canisters during manufacture and examination processes.